AU FUNG YEE v. CHENG YICK KEUNG

IN THE SUPREME COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS

HIGH COURT

-----------------

-----------------

JUDGMENT

-----------------

Application

1. This is a vendor and purchase summons in which the Plaintiff purchaser seeks, inter alia, a declaration that the Defendant vendor has not shown a good title to the property.

Background

2. The parties entered into an agreement ("the Agreement") dated 13th May 1996 for the sale and purchase of the property at Flat No.I, 2nd floor, Kwok Tai Building, Nos.26-32, Yue Man Square, Kwun Tong, Kowloon, Hong Kong ("The property"). The property was assigned to the Defendant by the predecessor-in-title Mr Kam Chung ("Mr Kam") on 28th March 1980. The assignment was executed by Mr Kam's daughter, this attorney pursuant to a Power of Attorney ("the Power of Attorney") dated 27th July 1979. Mr Kam had acquired the property by an Assignment dated 22nd September 1965, ("the Assignment").

3. Mr Kam's Chinese name was stated in the Assignment to be 金聰, whereas in the Power of Attorney the Chinese name of Mr Kam was 金沖. The Chinese names appeared after the words Kam Chung in the body of these two documents. Mr Kam signed these two documents in Chinese. The Plaintiff contends the signatures were different as well.

Vendor's obligations

4. A vendor has a duty both to show and give good title. He shows good title by the production of all documents relating to his good title and gives or makes that title by proving it as a matter of evidence.

Duty to give good title

5. The vendor's duty to give title depends on the terms of the contract of sale. The vendor may agree to give good title or some lesser title. If the vendor agrees to give good title, he must give a good title extending right back to the ultimate root of title - the Crown lease - unless such obligation is varied by agreement. The obligation is not affected by the provisions of s.13 of the Conveyancing and Property Ordinance ("the Ordinance")which only serves, to delimit the documents that the vendor is obliged to produce to the purchaser by way of proof of title. Section 13 does not affect either the obligation of the vendor to give a good title or his contractual duty in respect of pre-intermediate root defects. (Paragraph (v) [166] Hong Kong Conveyancing Law and Practices by Sihombing and Wildinson.)

Terms of the Agreement

6. Clause 21 of the Agreement incorporates Part A of the 2nd Schedule of the Ordinance. It further provides that in case of conflict the clauses in the Agreement shall prevail. Clause 9 of Part A of the 2nd Schedule provides that the vendor shall give good title to the property.

7. Clause 7.1 of the Agreement provides that:

"The Vendor hereby declares that all title deeds relating exclusively to the said Premises in his or in his mortgagee's/chargee's possession have been/will be delivered to the Purchaser's Solicitors. Should the Purchaser require certified copies of the Crown Lease or other title deeds and documents not in the Vendor's or in his mortgagee's/chargee's possession to complete the chain of title extending to at least 15 years before the date hereof, all costs and expenses for obtaining such certified copies shall be borne and paid by the Vendor solely. If the Purchaser requires copies of any documents in the Vendor's or his mortgagee's/chargee's possession relating to other properties retained by the Vendor as well as to the said Premises the Purchaser shall pay the cost of such copies."

8. Mr Lim, Counsel for the Defendant, submitted that his client's obligation to show good title was confined to the 15 year period because of the provision in Clause 7.1 which requires the Defendant to be responsible for the cost of obtaining certified copies of the Crown lease or other title deeds to complete the chain of title extending to at least 15 years before the date of the Agreement.

9. I disagreed. That particular provision only deals with the costs of furnishing certified copies of the title deeds. It does not in any way detract or cut down the Defendant's obligation to give good title as provided by Clause 9. While the intermediate root of title is the Assignment, in view of the Defendant's obligation to give a good title, the Plaintiff is entitled to look beyond this Assignment to see whether there is a defect in the Defendant's title.

The differences

10. The parties agreed that the Cantonese pronunciation of “金聰” and “金沖” is phonetically the same. However, it is clear that the second characters are entirely different. And the signatures in respect of the character “金” are entirely different.

11. The Assignment did not refer to the identity card number of Mr Kam (it may well be in those days identification by identity card was not required but no evidence was adduced in that regard). In the Power of Attorney Mr Kam's identity card number was specified. Enquiries by the Plaintiff's solicitors with the Immigration Department revealed that that identity card number referred to one Kam Chung “金沖” and who had never been known as “金聰”.

The cases

12. Mr Lim referred me to a number of cases in which the Court held that discrepancies in signatures do not constitute a defect in title. All these cases are decided on their own facts and are clearly distinguishable.

13. In Many Wise Investment Limited v. Tech Profit Development Limited [1993] 2 HKC 517 the signatures of an owner were written out differently in two title deeds. On one document, one character of her name was written in the literal form while in the other document it was written in an abbreviated form. There was evidence showing that she had used both forms of writing when penning her signature.

14. In Tong Yuen King v. Roberto Siu Lui (HC MP2949 of 1995), the owner was described as Chan Ieieen in one document whereas in the other document she was described as Chan Ieleen. On the facts, Yam J. held that there was no risk of a successful challenge to the identity of Miss Chan.

15. In Leung Yan Tim v. Ho Tak Man, (HCMP 3752 of 1990) in one document, in respect of the two owners' signatures. One was easily readable as Chan and the other was illegible. In the other document the same owners signed their names fully. The Chinese characters were agreed to be referable to the same names and in both documents the identity cards were produced and details recorded.

16. In Chudai (HK) Development Hong Kong Limited v. Portia International Limited (HCMP No.3928 of 1991) the owner in one assignment was described as Lam Chun; in another assignment the name given was Lam Chun alias Lam Yin Chor. A statutory declaration was made by the owner stating that the two names referred to the one and same person.

17. In Buildon Investment Limited v. Leung Sai Yum and another [1989] 2 HKC 499, the problem arose because the second and third Chinese characters of the name of the beneficiary in the will (from which title was dervied), renunciation of probate and letters of administration differed from that in the assent and subsequent documents. Liu J. (as he then was) held that the composition of the second and third Chinese character was close. They were phonetically identical. In the will and all subsequent documentations signed before the assent, there had been uniformity in the name of the beneficiary both in English and Chinese. The identity card which was issued earlier than the will carried two different Chinese characters for the name. The assent and subsequent conveyancing documents followed the identity card. The signature of the beneficiary in the renunciation compared well with that in the assent and the deed of assignment. At page 503 the learned judge stated that:

"It is not essential to the validity of a document that the parties must be described with precision, though an accurate description is eminently desirable. See F Goldsmith (Sicklesmere) Ltd v Baxter [1971] Ch 85. Mdm Chan has been, in my view, conclusively identified as the same person in all the relevant documents material to the transaction pending between the plaintiff and the defendants."

18. In F. Goldsmith, the company's name was F. Goldsmith (Sicklesmere) Ltd. It acquired a property which was conveyed to it in the name of Goldsmith Coaches (Sicklesmere) Ltd.

19. In Kan Wing Yau and another v. The Hong Kong Housing Society [1988] 2 HKLR 187 (this case was not referred to at the hearing) the predecessor-in-title of the vendor purchased the property in 1951 and signed the indenture in Chinese characters. In 1964 he had executed a Power of Attorney in favor of his mother with power of sale. In 1973 the mother assigned the property. The purchaser raised requisition as to title, inter alia, that the identity of the donor of the 1964 Power of Attorney had not been shown to be that of the previous purchaser since the Chinese character signatures appeared to be different. Clough J.A. at page 199 stated that:

"It was common ground between Counsel on the hearing of the appeal that the Chinese characters in both the relevant signatures were in the same order. However Mr Chan pointed out in his affirmation, the two signatures did not look the same. This in itself is a reasonable ground for suspicion and entitled the purchaser to demand reasonable proof of execution on the ground that the presumption of due execution does not arise under s.23 of the Conveyancing and Property Ordinance because there is not the appearance of due execution: Williams on Title 4th Edition page 659; Halsbury Laws of England 4th Edition Volume 42 para.157"

No evidence that Mr Kam used different names

20. The difference in the style of the signature may well be due to the passage of time, namely 14 years but there is no evidence that this is so. It is a fact that the Power of Attorney and Assignment were executed in front of solicitors, but it does not mean that “金沖” was the same “金聰”. Mr Lim informed the Court that enquiries had been made with Mr Kam and his daughter and the lawyers who handled the previous sales, however there was no response from them. There is just no evidence that “金沖” and “金聰” was the same person but using a different second character for his name.

21. Mr Lim relied on s.13(4) of the Ordinance which provides that:

"(4) A recital, statement, and description of any fact, matter or party contained in any document of title, mortgage, declaration or power of attorney relating to any land and dated or made not less than 15 years before the contract of sale of that land shall, for the purposes of any question as to proof of title concerning the parties to that contract and unless the contrary is proved, be sufficient evidence of the truth of that recital, statement and description."

In my view, this section is of no assistance to the Defendant because of the contrary evidence relating to the use of an entirely different second Chinese character.

22. Although Mr Lim argued that under s.7 of the Limitation Ordinance the limitation period had expired, and the Defendant has been in possession of the property since March 1980 without any challenge by any third party, the question depends on the knowledge of the owner of the property to the true state of events. Bearing in mind the burden is on the vendor to prove a good title beyond reasonable doubt, I just cannot say that the Defendant has shown that his title is not defective. For this reason, I will grant the Plaintiff the relief she seeks, namely:

23. The Plaintiff indicates that she would not ask for the costs of the investigation of title or of the application, hence I will make no order as to costs.