CHAN KA CHING v. YIU SUI FONG

DCCJ4434/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4434 OF 2014

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J U D G M E N T

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Introduction

1. This is the plaintiff’s application for summary judgment under O.86 of the Rules of the District Court arising out of an abortive conveyancing transaction.

2. By a provisional sale and purchase agreement dated 13 July 2014, the plaintiff agreed to purchase and the defendant agreed to sell a property known as “ALL THOSE 1 equal undivided 3^rd part or share of land and in ALL THAT piece or parcel of ground registered in the Land Registry as SECTION C OF LOT NO. 1218 IN DEMARCATION DISTRICT NO.10, And of and in the messuages erections and buildings thereon now known as 36C NG TUNG CHAI, TAI PO TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT GROUND FLOOR WITH GARDEN of the said Building” (“Property”) for the purchase price of $2.688 million. 

3. By the formal sale and purchase agreement dated 28 July 2014 (“Agreement”), completion was scheduled to take place on 8 September 2014, which date had been extended twice to 29 September 2014, and then 23 October 2014.

4. It is common ground that a total deposit of $268,800 and stamp duty of $40,320 had been paid by the plaintiff.

5. The transaction was not completed. This was because a dispute arose between the parties as to whether a number of requisitions of title had been satisfactorily answered by the defendant. The plaintiff, maintaining that the requisitions in question had not been satisfactorily answered, gave notice on 30 September 2014 to rescind the Agreement, and demanded the return of the deposit.

6. The defendant, on the other hand, maintaining that he had satisfactorily answered the requisitions, gave notice to rescind the Agreement, and forfeited the deposit, and reserved his rights to claim damages against the plaintiff.

7. The plaintiff brought this claim for the return of the deposit, and payment of the stamp duty, on the ground that the defendant was in breach of the Agreement in failing to satisfactorily answer the requisitions the plaintiff’s solicitors had raised and to show good title to the Property.

8. The plaintiff now seeks summary judgment for various reliefs claimed in the statement of claim, which include declarations that the defendant has failed to satisfactorily answer the requisitions raised by the plaintiff; that the defendant has failed to show and prove good title to the Property; that the plaintiff is entitled to rescind the Agreement and not to proceed with the transaction under the Agreement; that the plaintiff is no longer bound by the provisional sale and purchase agreement; and that the plaintiff is entitled to a lien on the Property; a full refund of the deposit and the payment of the stamp duty and damages to be assessed.

9. Both parties accept that a vendor has an obligation to show a good title. This includes “at the requisitions stage, the obligation is upon the vendors to show title by satisfactorily answering requisitions irrespective of the vendor’s ability to pass good title on the date of completion.” (see Lord Energy Ltd v Chen Paul & Anor [1997] 3 HKC 270 at 281B per Le Pichon J (as she then was) citing the Court of Appeal’s decision in, among others, Active Keen Industries Ltd v Fok Chi Keong [1994] 1 HKLR 396 at 404-405 and 413.

10. The time to decide whether a satisfactory answer is given to a requisition is before the completion or termination of the sale and purchase agreement as has been decided by the Court of Appeal in Polyson Jewellery Co Ltd & Anor v Liu Song Carols [2002] 2 HKC 183.

11. Thus, for the purpose of this application, the issue I need to determine is whether the defendant has failed to satisfactorily answer the title requisitions raised by the plaintiff and, if so, whether in such circumstances, whether the defendant has failed to show title, which would put him in breach of the Agreement.

12. In order to understand the nature of the requisitions, it is necessary to set out below the undisputed conveyancing history of the Property.

The conveyancing history of the Property

13. Sum Tin Loi (“STL”) was the owner of a parcel of land known as “ALL THAT piece or parcel of ground situate lying and being at Tai Po New Territories, Hong Kong and registered in the Tai Po New Territories Land Registry as THE REMAINING PORTION OF LOT NO.1218 IN DEMARCATION DISTRICT NO.  10” (“Lot 1218”).

14. By way of a deed poll dated 15 October 1994 (“Deed Poll”) , STL sectioned Lot 1218 into three portions, namely Section C (“Section  C”) , Section D (“Section D”)   and the remaining portion of Lot 1218 (“RP Lot”). Attached to the Deed Poll is a plan (“First Plan”) containing a scaled Division Plan, a scaled Location Plan as well as a table of Sub-divisions of Lot 1218.The First Plan was stated to be prepared by a chartered land surveyor.  The Division Plan and the table of Sub-divisions were supposedly coloured but the copy that was placed before me is a black and white copy. According to the table of Sub-divisions, each of Section C, Section D and the RP Lot were respectively stated to have areas of 179.1 sq.m. 197.4 sq.m. and 254.4 sq.m. 

15. On 31 October 1994, STL assigned Section C to Sum Tsun Wai (“STW”). 

16. By a deed of rectification dated 13 January 1998 (“DOR”), executed by STL, rectifications were made to the Deed Poll by substituting (i) the stated respective areas of 163.3 sq.m. for 179.1 sq.m in Section C, 182.1 sq.m. for 197.4 sq.m. in Section D and 279.4 sq.m. for 254.4 sq.m. in the RP Lot; and (ii) a land boundary plan annexed to the DOR (“Second Plan”) for the First Plan.  The Second Plan is stated to have been certified by an authorized land surveyor who certified that the said boundary plan “correctly represents” the land boundary surveys that had been completed in December 1997.

17. Pursuant to a building licence (“BL”) No. 205/99, dated 3 August 2000 granted by the Government, and a certificate of compliance dated 18 July 2003, STW constructed on Section C a 3-storey building (“Building”) and a garden on the ground floor of the Building as delineated by an area coloured pink on a plan annexed to the BL (“BL Plan”). The copy placed before the court is a black and white copy. In the black and white copy of the BL Plan, is an area of about 65.03 sq.m. stated to be an area coloured pink. The BL Plan contains a scaled division plan of Section C and is stated to have been approved by a District Land Surveyor.

18. A deed of mutual covenant dated 11 October 2004 (“DMC”), was entered into between STW, as the owner of the ground floor unit with the garden and the 1^st floor unit, and another party, as the owner of the 2^nd floor unit of the Building. Attached to the DMC is a plan (“DMC Plan”), which is stated to have been signed by an authorized land surveyor.

19. By an assignment (“Assignment”) dated 6 December 2004, STW assigned the Property to the defendant, to which assignment, the same DMC Plan was attached.

The requisitions

20. The question that arises here is that the plaintiff’s solicitors were not satisfied that the DOR was a properly executed document on the ground that STL, after having sold Section C to STW, had no capacity to execute the DOR. They asserted that the DOR, in order to be valid, would have required proper execution by STW (the owner of Section C at the material time) or the joining in the execution of the DOR by STW.

21. The real fear, as stated in the letter of the plaintiff’s solicitors of 5 September 2014, is their perceived “real risk” to the title of the Property due to their asserted invalidity of the DOR, referring to the case of Tam Mo Yin v Attorney General [1996]1 HKC 379. Their position as to the effect of an invalid DOR can be found in their letter of 24 September 2014:

“We take the view that the DOR discloses that the DP [the Deed Poll] is invalid. The DP is however the de facto root of the title of the Land [Section C]. If the DP is invalid, the owner of the Land cannot have a valid legal estate of the Land. The BL cannot cure the problem of this de facto root of title. Thus, it is not a matter of whether there is a risk of successful assertion of any incumbrance or the boundaries of the Land by [STW] as you argued … It is a matter whether the Vendor possess a valid legal estate to the Land.”

The Vendor’s answers and responseS to the requisitions

22. The defendant’s former solicitors (Messrs Tam & Partners) sought to answer and respond to the requisitions, which answers and responses can be summarized as follows.

23. The defendant’s primary position is that the DOR is valid. They asserted that since STL was the person who had executed the Deed Poll, STL was the proper person to execute the DOR. The owner of Section C (and the owners of the other sub-divided lots) was not entitled to execute the DOR. It was asserted that since the DOR did not effect any sectioning to the sub- divided lots of Lot 1218, the rectifications which had been made by the DOR did not affect the title of the Property. The joining of STW (and other owners of the sub-divided lots) in the execution of the DOR, they asserted, was not necessary. They asserted that the changes having been made by the DOR were no more than replacing the First Plan (which was stated to have been a wrong plan) with the correct Second Plan.

24. Even if the DOR were invalid by virtue of STL having disposed of his interests in Section C, the defendant’s formers solicitors argued that a good title had been shown by:

(1) The rebuttable presumption provided in s. 13(4) of the Conveyancing and Property Ordinance[1] (“CPO”), Cap.219. The DOR, having been executed more than 15 years before the Agreement, the contents stated therein, they asserted, were “unless the contrary is proved” deemed to be correct.

(2) The DOR is irrelevant in that the sale of the Property was subject to the BL but not to the DOR.  It was asserted that the alleged invalidity of the DOR had no effect on the title of the Property.

(3) There is no real risk to the title of the Property. The registration of the DOR in the Land Registry, the defendant’s former solicitors argued, would have shown that STW (and other owners of the sub-divided lots of Section C for that matter) would have had real or constructive knowledge of the DOR.  Particularly so when no objection had been made by STW to the rectifications.

(4) The boundaries of Section C and the Building of which the Property forms part were beyond doubt as they had been clearly delineated and marked on the BL Plan, which plan together with the BL had been approved by the District Land Surveyor before permission was granted to SWL to construct the Building on  Section C. The defendant’s formers solicitors also referred to the House of Lord decision of MEPC v Christian-Edwards & Ors [1979] 3 All ER 752.

25. To further bolster their assertion of the absence of risk and the unlikelihood of any assertion by STW to challenge the validity of the DOR, the defendant’s former solicitors provided to the plaintiff’s solicitors a letter dated 5 September 2014 from STW’s solicitors (Messrs Terry Yeung & Lai). The relevant part of that letter reads as follows:

“… What being the doubt was as to whether Sum Tsun Wai (“STW”) being the owner at the material time when the DOR was executed having signify (sic) his consent to the DOR.

Although STW had not joined in the DOR to signify his consent, he had been (sic) ratified and confirmed the DOR and accepted the variation as stated therein by the later granting and acceptance of the Building Licence …, continuously application of a Certificate of Compliance, and payment of premium of removal of non-assignment clause and assign the [Property] to the [defendant].

If the challenge as that STW had not signified his consent to the DOR, we have here a situation that STW had recognized the validity of the DOR and its binding effect by various actions as aforesaid ...”

questions framed by the parties

26. Before considering the question of whether the defendant’s former solicitors have satisfactorily answered the requisitions or shown good title, I should mention perhaps by way of a footnote[2] an agreed list of questions counsel had drafted at the hearing for the court to answer.  After having reflected on these questions, I form the view that the list of questions would not assist but rather constrict the discussion in relation to the question that I need to decide.  As will be seen below, the conclusion to be reached from the discussion would ultimately address the questions in the list.

Were the requisitions satisfactorily answered?

A.  Was the DOR properly executed- any triable issue?

(a) Parties’ arguments

27. It should be made clear at the outset that the discussion below is only confined to Section C. There is no need to refer to the other sub-divided land lots of Lot 1218 because the requisition is only concerned with the absence of execution by the owner of Section C in spite of references having been made to other owners of the sub-divided lots in some of the correspondence exchanges as well as in the written skeleton of the plaintiff’s counsel, Mr Ho. Indeed, no evidence has in fact been adduced as to the ownership of the other two sub-divided lots at the time of the execution of the DOR.

28. STL had no capacity to execute the DOR, Mr Ho submitted, because s.41 (2)[3] of the CPO prohibits a person with no interest in land from enforcing covenants concerning the land in question. Since STL, Mr Ho suggested, when executing the DOR, had already assigned his interest in Section C to STW and without the latter’s authorization, he had no right to enforce the rights of an owner in relation to a matter affecting its interest in land. 

29. To further support his argument that a person who had no interest in land is precluded from executing a deed that affects the interest in the subject land, Mr Ho referred to three cases as follows.

30. Lee Hysan Estate Co Ltd v Sky Heart Limited, unreported, CACV 64/1997, 26 February 1998, was a case  concerned with an appeal against a permanent injunction granted to the plaintiff, the original covenantee, to restrain the defendant from breaching restrictive covenants which were contained in the original assignments of a piece of land. The court by a majority dismissed the appeal. Mr Ho cited a passage of Rogers J.A., one of the justices of appeal who delivered one of the majority decisions, stating (at p.11) that the plaintiff “ having disposed of their entire interest in the land could not use Section 41 to enforce the covenant.”

31. In Ko Lan v Hoo Man Kuen Martin & Anor, unreported, HCMP 4416/1998, 19 January 1999, the court held that a deed of release of mortgage and a deed of rectification had not been properly executed because the requisite seals had not been affixed on these instruments.

32. On Tak Development Limited & Anor v Ng Woon Tong & Anor,unreported, HCMP 1004/1996, 11 June 1996, was a case involving the assignments by the 1^st plaintiff of two car parks, No.95 and No. 89. Car Park No. 95 was first assigned to the 1^st defendant. After the 1^st plaintiff had completed the assignment of Car Park No. 95 and thus no longer had any interest in that car park, the 1^st plaintiff went on to assign Car Park No. 89 to the 2^nd plaintiff. However, an error occurred in the assignment of Car Park No. 89. Instead of assigning Car Park No. 89, the 1^st plaintiff mistakenly assigned Car Park No. 95 in the assignment. To remedy the error, the 1^st and 2^nd plaintiffs executed a Deed of Rectification and Confirmation by substituting Car Park No. 89 for Car Park No. 95 and confirming the assignment of Car Park No. 89 to the 2^nd plaintiff. The land registry refused to register the Deed. This necessitated an application by the 1^st and 2^nd plaintiffs for a declaration, which was granted by the court, that the Deed was sufficient for the rectification of the said error.

33. The answer of the defendant’s former solicitors has been set out in §23 above. Mr Yip, counsel for the defendant, did not advance further arguments in relation to this answer.

(b)  Discussion

34. The crux of Mr Ho’s argument that DOR is invalid is two-fold. First, the DOR is compared to a covenant (which involves an agreement between two or more persons to do or to give, or to prevent, or refrain from doing something). Second, the Deed Poll is the same as an assignment that essentially involves a disposition of interests in land.  

35. I am not persuaded that the DOR is in the nature of a covenant.  The rectifications contained in the DOR, in my view, do not have any characteristics of covenants. Section 41 (2) of the CPO,  and the case of Lee Hysan Estate Co Ltd  Mr Ho cited  are concerned with enforcement of covenants, and are therefore plainly inapplicable to this case.

36. Since the requisition is concerned with the alleged lack of capacity on the part of STL, the case of Ko Lan, which is more about the formality of execution, is also unhelpful, in my view, to Mr Ho.

37. On Tak Development Limited, which facts have been summarized above, was about a deed of rectification executed to rectify an error in an assignment. Mr Ho seems to have cited this case to support his argument that a person who executes a deed of rectification is required to possess interests in the land in question. It is noted however the document that required rectification in On Tak Development Limited was an assignment. However, in this case, the document that required rectification is a Deed Poll, which unlike an assignment, does not involve a disposition of interest in land. In any event, I do not find that this case assists Mr Ho. As has been discussed above, in that case, the court had accepted the execution of the deed of rectification by the original owner of the Car Park (No. 95) who no longer had any interest in that Car Park, without requiring the new owner of Car Park No.95 to join in the execution. Thus, I also do not find this case relevant.

38. Both lines of Mr Ho’s argument in comparing the DOR to a covenant and to an assignment are thus rejected. The contention by the plaintiff’s solicitors that STL had no capacity to execute the DOR on the ground of his having disposed of his interest in Section C appears to have been entirely unsupported by any valid arguments.  

39. It is noted that, apart from making amendments to the stated areas of the different land lots, STL expressly states that the Deed Poll is to continue “to be in full force and effect”.  This would appear, in my view, to have been consistent with the stated reason in the DOR for the rectifications, which is stated to be that of inadvertence. Moreover, no intention of disposing of interests or enforcing of covenants can be discerned from the DOR. 

40. Given the fact that the authorized land surveyor had stated in the Second Plan that the land boundary plan contained in the Second Plan was based on the latest land boundary surveys, it would implicitly suggest that the substitution of the First Plan by the Second Plain is only to represent the latest boundary plan as a result of the recent boundary surveys.

41. Thus,  it seems that the rectifications were brought about by an updated boundary survey.  The errors in the Deed Poll would implicitly be due to the absence of a boundary survey at the time of the execution of the Deed Poll. Since I find no authorities that suggest that STL had no capacity to remedy the errors in the Deed Poll, I’m inclined to, in the light of the analysis above, find that a triable issue has been raised on the validity of the DOR notwithstanding the absence of any authorities from Mr Yip in support of the defendant’s asserted validity of the DOR.

42. If however I were wrong to come to this view, and that no triable issue has been raised on the validity of the DOR, I should next examine the answers the defendant’s former solicitors have put forward in relation thereto.

B.  Were the DOR invalid, is there any triable issue?

B.1 Section 13(4) of the CPO

(a) Contentions

43. In his written skeleton, it is Mr Ho’s submission that s.13 (4) of CPO would not assist the defendant. This was because, Mr Ho submitted, the presumption provided in s.13 (4) of CPO only related to a recital, statement or description of a fact of a title document. The subject requisition is however about the capacity of the person who executed the DOR.

(b) Discussion

44. In showing a good title under s.13 of the CPO (which provisions the parties have agreed to adopt, as will be discussed under sub-heading B.2 below, by clause 11 of the Agreement), a vendor can pray in aid of s. 13(4) of the CPO in asserting the sufficiency of evidence of truth of a recital, statement and description of any fact, matter or party contained in any document of title. 

45. I agree with Mr Ho that the defendant cannot rely on the presumption provided in s.13 (4) of the CPO in asking the court to assume that STL had acted with authority when he executed the DOR. Neither can the defendant, in the light of the evidence to the contrary having been shown in this case that STL was not the owner of Section C, rely on s.13 (4) of the CPO in presuming the reference of STL in the DOR as the “owner” of Lot 1218 to be true.

46. Notwithstanding this, the defendant’s former solicitors can, in my view, rely on the presumptive provisions of s.13 (4) of the CPO in asserting the sufficiency of the evidence of truth in relation to the rectifications contained in the DOR (should it be a title document). In the absence of any evidence to the contrary, the defendant’s former solicitors are therefore able to assert, irrespective of any alleged invalidity of the DOR, that the errors in the Deed Poll have been sufficiently rectified by the DOR (were it a title document) as a result of the presumed truthfulness of the rectifications. 

B.2 Is the DOR relevant in the showing of a good title?

(a) Parties’ contentions

47. In considering the relevancy of the DOR in the showing of a good title, Mr Yip suggested that the court should first look to the parties’ bargain in accordance with the provisions of the Agreement. 

48. What is then the contractual bargain in this conveyance?  This, Mr Yip suggested, could be found in clause 10(a) and clause 24 of the Agreement.

49. Clause 10(a) of the Agreement provides that the sale of the Property is “subject to and with the benefit” of the DMC.  Mr Yip therefore argued that, the parties’ agreed bargain should have been confined to and identified by the delineations of the boundary and the shape of Section C as contained in the DMC and its DMC Plan, as well as the BL and the BL Plan.  The DOR, Mr Yip implicitly stated, was therefore irrelevant for the purpose of showing a good title.

50. Clause 24 of the Agreement further provides for an acknowledgement by the plaintiff that he had inspected the Property and further that the purchase was made on an “as is” basis.  By these provisions, Mr Yip argued that a good title as to the parties’ contractual bargain, which is the Property, has been shown by the BL Plan, the DMC Plan and the Assignment.

51. On the other hand, it is Mr Ho’s submissions that the BL cannot be relied on by the defendant in the showing of a good title. Apart from asserting that the use by STW of an invalid DOR in the application for the BL would have the consequence of tainting the validity of the BL, Mr Ho further argued that the BL, being not a land grant or a title document, could not have cured any title defect in relation to Section C.  Referring to a Note on the BL Plan that states that the BL Plan “should not be interpreted as a definitive record of land status” and is “for the purposes of identification only”, Mr Ho therefore submitted that the BL would not have assisted the defendant as a title record of the boundaries of Section C.  

(b) Discussion

52. In determining whether the DOR is relevant in the showing of a good title, the starting point is to look at the parties’ agreement. In this case, the parties have agreed by clause 11 of the Agreement that requires the defendant to show a good title in accordance with s.13[4] of the CPO. 

53. There is no dispute in this case that the Crown lease (now the Government lease) (“Government Lease”) is the ultimate root title document. 

54. It is also not in dispute that the Deed Poll is also a Government Lease by virtue of s.3 of the Interpretation and General Clauses Ordinance, Cap 1.

55. As for the DOR, Mr Ho also asserts that it falls within the definition of a “government lease” and forms part of a root title document.  On the other hand, Mr Yip does not seem to have either supported or disagreed with Mr Ho’s assertion in relation to the title status of the DOR. In the absence of any opposing arguments, I will treat the DOR, for the purpose of this discussion, as a root title document as well.

56. Apart from the Government Lease, the Deed Poll and the DOR, which were agreed as root title documents, I should next consider the status of the other documents, viz the BL and the DMC, which are expressly identified by the Agreement.

57. Pursuant to s.10 of the Agreement, there can be no dispute that the DMC, by the express agreement of the parties, is also a title document. A closer examination of the DMC, in particular the DMC Plan annexed to it, also discloses clear demarcations and the dimensions of the Building of which the Property forms a part. In the DMC Plan is a block plan of Section C which is marked by a square shape with a letter “P”, denoted by  a pink colour description (which is the same colour description stated in the  BL and the BL Plan to mark the area on which the Building was permitted to be constructed).  In it, not only the floor plan of the Property has been set out, the floor areas of the ground floor unit and the garden have further been respectively stated and marked.  Thus, the DMC is another good title document that the defendant can rely on in showing the boundary and areas of the Property.

58. As for the BL, whilst it has not been mentioned in the Agreement as a title document, it is however identified as a part of the Government Lease in the DMC. According to the recital in the DMC, the Government Lease means the Government Grant as described in Part 2 of the Second Schedule to the DMC.  Part 2 of the Second Schedule contains a modification having been made to the Government Lease by the BL and a Consent Letter dated 3September 2004 (“Consent Letter”). 

59. Accordingly therefore, according to Part 2 of the Second Schedule to the DMC, the BL and the Consent Letter are expressly stated to be parts of the Government Lease, and thus are title documents as well.

60. I have not been provided with a copy of the Consent Letter. Nor have the parties referred to it. I can only assume by looking at the description that the Consent Letter would have likely been the consent given by the Government to the construction of the Building on Section C.

61. Since the BL is also a root title document, the defendant should be able to, apart from the Consent Letter (which I have not seen), rely on the BL to show a good title. This shows that Mr Ho’s arguments that the BL is not a land grant or a root document and it cannot be used to cure the alleged defects in the Deed Poll are incorrect and ought to be rejected. 

62. The BL is a good title document that, in my view, undoubtedly shows the lot boundaries of Section C. According to the Note to the BL Plan, the lot boundaries of Section C as shown in the BL Plan “have been derived by re-conciliation between the original land registration boundaries and mapping detail as shown on contemporary survey sheets.”  In deriving the lot boundaries as shown in the BL Plan, the District Land Surveyor would have been required to reconcile the boundaries shown in the First Plan attached to the Deed Poll and the Second Plan attached to the DOR, and the other contemporary survey sheets. Any alleged lack of capacity in relation to the execution of the DOR would have no bearing on the re-conciliation process. In the circumstances, irrespective of the express disclaimer contained in the Note referred to by Mr Ho in §51 above, I am of the view that, in the absence of any evidence to the contrary, the BL Plan can still be looked at for elucidation purpose for the boundaries and dimensions of Section C. Since the discussion above has established that the BL is a root title document, I therefore do not agree with Mr Ho that the defendant cannot rely on the BL and the BL Plan in showing a good title. These title documents clearly establish beyond doubt the boundaries of Section C.

63. Apart from the root title documents, the defendant, according to s.13 of the CPO, would be next required to show a chain of title from a good intermediate root of title to the leasehold interest created by the Government Lease. In the instant case, since the Government Lease was granted more than 15 years before the Agreement, the defendant was not required by s.13 (1) (b) of the CPO to show a chain of title from the date of the Government Lease: it was sufficient for him to show a chain of title by the intermediate root of title, being an assignment, a mortgage by assignment or a legal charge, would be a good root of title, if it was over 15 years old. In the case of any subsequent instrument forming a link in the chain of title executed less than 15 years before the date of the Agreement, it would be sufficient proof of the title.

64. The Assignment, which was executed less than 15 years before the Agreement, would be (according to the preceding paragraph) an instrument that forms a link in the chain of title. Given the fact that the same DMC Plan has also been attached to the Assignment, the Assignment, in my view, would also be sufficient proof of the title.

65. In the circumstances, I find that a good arguable defence has been shown in relation to Mr Yip’s submissions that the defendant, irrespective of the alleged invalidity of the DOR, is able to rely on the various title documents to show a good title.

 B.3 any real risk to the title of the Property?

(a) Parties’ arguments

66. The duty of showing a good title does not go so far as to require the defendant to show a perfect title, Mr Yip contends. Citing Mexon Holdings Ltd v. Silver Bay International Ltd [2000]1HKLRD 935, Mr Yip argues that when deciding whether a good title can be shown or given, the court should look at the situation from the standpoint of a willing purchaser and a willing vendor both possessed of reasonably robust commonsense, both intending to see the transaction through to completion in terms of their own bargain (per Litton PJ in Mexon Holdings Ltd v. Silver Bay International Ltd [2000]1HKLRD 935 at 942G).

67. Mr Yip submitted that irrespective of any defect that might have been found in the DOR, the effect of such defect would have little impact on the title of the Property, for the defendant’s former solicitors have been able to  provide sufficient evidence by way of, for example, the registration in the Land Registry of the DOR (that would have constituted sufficient constructive knowledge), and good title documents, in showing that there is no real risk of a successful assertion against the plaintiff  in relation to the title of the Property.

68. It has been suggested by Mr Yip that the registration of the DOR in the Land Registry would have fixed sufficient constructive knowledge on STW (or any party having an interest in Section C). Pertinently, Mr Yip added, the apparent absence of objection from STW or any party for the past 16 years since the execution of the DOR will be compelling evidence in showing the absence of any real risk of assertion against the title of the Property.

69. Apparently with a view to answer the query by the plaintiff’s solicitors regarding the alleged defect arising from the lack of consent or authorization from STW, Mr Yip further relies on the letter dated 5 September 2014 as discussed in §25 above from STW’s solicitors the defendant’s former solicitors have referred to in the answers, and contends that the said letter is cogent evidence in confirming STW’s consent to the rectifications made in the DOR. 

70. Mr Ho however submitted that the constructive knowledge of the DOR did not cure the defects of the Deed Poll. By s.4 (1) of the CPO, which provides that “a legal estate in land may be created, extinguished or disposed of only by deed”, Mr Ho stated in his written skeleton that the “defects of the Deed Poll can only be remedied by another deed properly executed or at least confirmed by the owners of all the three sections affected.  The Building Licence or any conducts (sic) of STW alleged by the Defendant could not have cured the defects of the Deed Poll at least insofar as the legal estate of the Land is concerned.”

(b) Discussion

71. In repeating in this argument for the need of execution by other owners and in disputing the usefulness of the BL in the showing of title, Mr Ho’s arguments appear to be circuitous. In view of what has been stated in §27 above, I do not need to give any consideration to his argument on the joining of other owners.  Since it has been established from the discussion under sub-heading “B2” above that the BL is a root title document that the defendant can rely on, it is not necessary to deal with Mr Ho’s argument in relation to the curing of defects. In any event, as the DOR has been agreed as a title document, the defendant can, in accordance with my opinion stated in §46 above, rely on s.13(4) of CPO to rectify the errors in the Deed Poll.

72. I do not find Mr Ho’s reference to s.4 (1) of the CPO in arguing that the defects (errors, in my view, should have been a more apt description) of the Deed Poll can only be remedied by another properly executed deed has been correctly made.  As stated when discussing the validity of the DOR above, I do not find that Mr Ho has shown that the rectifications in the DOR, have “created, extinguished or disposed of” a legal estate in relation to Lot 1218.  His arguments are therefore respectfully rejected.

73. In my view, the defendant is entitled to rely on the evidence in showing the lack of a real risk of a successful assertion. In the House of Lord decision of MEPC the defendant’s former solicitors have referred to in their answers to the requisitions, the court there confirmed that where the facts and circumstances of a case were so compelling that the court could conclude beyond reasonable doubt that the purchaser would not be at risk of a successful assertion against him of an incumbrance on the title, the court ought to declare that a good title had been shown and ought not to be deterred from so deciding by the mere possibility that the purchaser might be involved in future litigation by a claimant to the incumbrance who was not bound by the court’s decision (see:  the leading judgment given by Lord Russell of Killowen in MEPC [1979] 3 All ER 752 at 757g-758a).

74. The evidence the defendant’s former solicitors rely on in support of their arguments of the absence of risk of a successful assertion consists of three types. First, the registration of the DOR in the Land Registry. Second, the letter of 5 September 2014 from STW’s solicitors referred to in §25 above. Third, the reliance on the DOR by STW in the application for the BL.

75. After having examined the evidence referred to in the preceding paragraph, I find, on the totality of the evidence, that the defendant’s formers solicitors are entitled to assert the lack of risk of a successful assertion. The registration of the DOR, in my view, has cogently shown that STW or a person affected by the rectifications in the DOR would have been constructively informed of the contents of the DOR. There can be no doubt in my view that STW, as evidenced by the letter of STW’s solicitors, has consented or in the very least did not object to the rectifications having been made by STL to the Deed Poll. The fact that no objection seems to have been made by STW or any party in the past 16 years is compelling evidence that enables the court to infer that STL had been authorized by STW in executing the DOR.

76. Last but not the least is of course the application for the BL by STW (made on his behalf by his attorney, STL). When making the application for the BL, STW would have relied on, among other things, the DOR. This reliance would have been sufficient to bind STW from denying the rectifications having made been by STL in the DOR.

77. In issuing the BL, the Government must also have acted on, among other things, the DOR - as the defendant’s former solicitors seem to have sought to contend in their answers. In such a case, it would only be equitable to deem the rectifications, irrespective of the alleged lack of capacity on the part of STL in executing the DOR, as having been properly made.

78. It is further noted in the BL that a determination made by the District Lands Officer as to the amount of premium payable by STW, according to clause 4(e) (ii) of the BL, is final and binding on STW.  Thus, in spite of the disclaimer in the BL as to the title of Section C, I consider that the final and binding nature of the decision of the District Lands Officer would further militate against any real risk in relation to a successful assertion against the plaintiff of the alleged invalidity of the DOR on the title of the Property.

79. In conclusion, I do not agree with Mr Ho’s assertion in §51 above that the use of the alleged invalid DOR for the BL would have tainted the validity of the BL. In my judgment, a good defence has been shown that there is no real risk of a successful assertion.

B.4  Any doubt as to the boundaries of Section C and the Building?

(a) Contentions

80. In one of the queries the plaintiff’s solicitors raised, they took the view that an invalid DOR would have rendered the shape and the boundaries of Section C uncertain. Referring to the case of Tam Mo Yincited by the plaintiff’s solicitors in one of their correspondence exchanges, Mr Ho submitted that without any verbal descriptions in ascertaining the boundaries of Section C, the BL Plan, which the defendant’s former solicitors relied on, is insufficient to establish the dimensions of the Building having been erected on Section C.  Particularly, Mr Ho added, the total area of Section C is shown to have been reduced by the DOR and further that there were alternations in terms of delineations and boundaries, particularly the northern boundary of Section C.

81. In further elaboration of the answer provided by the defendant’s former solicitors, Mr Yip contended that since the subject matter of the conveyance is only in relation to a unit on the ground floor with the garden on the Building, but not the entire Section C, any alleged uncertainty as to the boundary of Section C is irrelevant.  Further, it was contended that despite the reduction in the total area of Section C from 179.1 sq.m. To 163.3 sq.m. as a result of the rectifications having been made in the DOR, not only would the reduction have no impact on the Property, the reduction is also too insignificant to preclude the defendant from substantially conveying to the plaintiff what he had contracted to purchase.

82. In support, Mr Yip referred to two Hong Kong authorities in respect of the approach to be taken in relation to the question of whether the court should grant a decree of specific performance – Goldful Way Development Ltd v Wellstable Development Ltd [1999] 1 HKLRD 563; Leung Wing Fai v Onlink Investments Ltd [2000] 1 HKLRD 725 and Continental Zone Ltd v. More Glory International Ltd, unreported, HCMP 446/2012, 18 April 2013.

83. Since these cases are more about the question of specific performance, I do not propose to set out in detail the approach elucidated from them save as to state the general principle set out therein that good title can be given if the vendor offers substantial performance. 

(b)  Discussion

84. As stated above, I have come to the view that the BL and the BL Plan and the DMC, which are title documents, have beyond doubt established the boundaries and the area of Section C as well as the Building of which the Property forms a part. As discussed above, the BL Plan, which was approved by a District Land Surveyor, has clearly demarcated and delineated the boundaries of Section C.  It also shows the location upon which the Building was to be erected (as designated by coloured “Pink” on the BL Plan) as well as the area, which has been stated to be 65.03 sq.m.  Hence, I am unable to agree with Mr Ho that oral descriptions of the boundaries of Section C are required when the title documents mentioned above are clearly able to establish the boundaries. Tam Mo Yin, the case Mr Ho (as well as the plaintiff’s former solicitors) referred to, is plainly irrelevant. In that case, extrinsic evidence was needed to be adduced in order to determine the boundary of a land lot where the area of the lot itself could not establish the shape and the boundary of the property, which is not the case here.

85. The allegation by the plaintiff’s solicitors and also by Mr Ho as to the alleged alternations in terms of delineations and boundaries, particularly the northern boundary of Section C is not supported by any evidence.  Thus, in the absence of any evidence to the contrary that the boundaries and the area shown on the BL Plan are incorrect, the BL Plan is sufficient in showing the boundaries of Section C and the Building.

86. In addition, the DMC, to which the sale of the Property is subject, also confirms that Section C and the Building have been notionally divided into 3 undivided shares with one share having been allotted to the Property only. Accordingly, all that the plaintiff will be entitled to enjoy in the Property would be an equal undivided share as tenant-in-common with the owners of the leasehold estate over Section C although he would enjoy exclusive right of occupation of the one share having been allotted to the Property, but he shares the common parts of Section C with all other owners of Section C.  Thus viewed, the plaintiff’s bargain is not the purchase of the entire area of the Section C as Mr Yip has rightly contended. 

87. For the reasons discussed above, I do not find that there is any uncertainty as to the boundaries of Section C. The BL and the DMC can be relied on to establish the boundaries of Section C and the Building of which the Property forms apart.  The alleged invalidity of the DOR has no impact on the validity of the legal estate of Section C as the plaintiff’s former solicitors have suggested.  Thus, a good defence has been shown.

Conclusion

88. For the foregoing reasons, I find that the defendant has shown a good defence in relation to the issue of whether the defendant’s former solicitors have satisfactorily answered the requisitions and whether the defendant has shown a good title.

89. In the circumstances, given the conclusion that I have reached, I consider that the proper order should be a dismissal of the summons, for my decision would have the effect of disposing of the entire proceedings had the plaintiff in this case opted for the more usual process by vendor and purchaser summons rather than by the summary procedure.

90. Accordingly, I make the following orders that:

(1)    The plaintiff’s summons is dismissed.

(2)    There shall be a costs order nisi that the plaintiff do pay the defendant’s costs of the summons, together with reserved costs and certificate for counsel.  The costs are to be taxed if not agreed.