WONG KWOK FAI and Another v. SHAM YIU MAN

1995 MP No. 2147

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is a Vendor and Purchaser Summons in which the Plaintiffs (the Purchasers) seek declaratory relief that the Defendant (the Vendor) has failed to answer adequately two requisitions on title, that consequently good title has not been shown and the Purchasers were entitled to annul the sale, and for orders for the return of the deposit and other consequential relief.

2. There is a cross-summons by the Vendor for an order that the deposit be forfeited, that he be entitled to rescind the Agreement and resell the property the subject of the sale and purchase, and for declaratory relief that any deficiency be made good by the Purchasers.

3. The parties are agreed that the crux of the matter lies in two documents which formed part of the title. But first I must briefly set out the background facts in chronological order.

Background Facts

4. The property the subject of the Requisitions was an equal undivided fourth part or share of and in Lot 1305 in D.D.123 ("the Property").

5. On 6 March 1957, Choy Wing Yip made a Will in which he gave "all the business, cash and personal and real property standing in my name and left behind (by me) and also the business, shares, cash and personal and real property left behind by my late father and taken over by me (but which are) not yet partitioned, wholly to my 'kit-fat' wife Chan Siu Man to take over and (I) appoint Chan Siu Man to be the Executrix of my Will and to have full powers to deal with (the same)."

6. On 9 March 1957, Choy Wing Yip died. I shall refer to him hereafter as "the Deceased".

7. At his death, the Deceased did not own the Property.

8. On 13 January 1959, Chan Siu Man ("the Widow") was granted Probate of the Deceased's estate. The schedule of property attached to the Probate did not include the Property.

9. On 24 August 1964, the Deceased's mother Tsoi Li Shi as Assignor assigned Lot 1305 in D.D.123 "to [three of her sons] and to [the Widow] as executrix of the estate of [the Deceased] ... as Assignees who and [are] the sons of the Assignor except the said [Widow] who is acting in the capacity of the executrix of the estate of [the Deceased] who was a son of the Assignor as Tenants in Common in equal shares ...". This Assignment was effected by a document intituled "Assent" and was stated to be in consideration of natural love and affection. It was registered by Memorial No.154213 on 1 September 1964.

10. On 31 December 1975, the Widow executed a document also intituled "Assent". This document stated that she "the sole Executrix of the Will of [the Deceased] who died on the 9th day of March 1957 and whose said Will was proved by me on the 13th day of January 1959 in the Probate Jurisdiction of the Supreme Court of Hong Kong hereby assents to inter alia the Property ... in the New Territories of the Colony (vesting in myself the said Chan Siu Man) for the residue of the term of years created by the Crown Lease thereof." This document was registered by Memorial No.188029 on 6 February 1976.

11. It is common ground that Lot 1305 in D.D.123 was subsequently sold by inter alios the Widow who were described as "registered and beneficial owners" by an Assignment Memorial No.341371. I have not seen a copy of this Assignment.

The Requisitions

12. On the sequence of events described above, the Purchasers' Solicitors raised the 2 requisitions pursued in these proceedings.

13. Requisition No.3 was in these terms: "By an Assent Memorial No.154213, when Tsoi Li Shi assigned the Property to Tsoi Wing Yip (Chan Siu Man was the executrix of his estate) the said Tsoi Wing Yip had already dead [sic]. Please comment."

14. Requisition No.2 was in these terms: "By an Assent Memorial No.188029, Chan Siu Man assigned as executrix of Tsoi Wing Yip unto herself, inter alia, the Property pursuant to a Probate. However this property is not mentioned in the Probate. Please comment."

Requisition No. 3: Gift to Deceased's estate

15. I shall deal first with Requisition No.3. The Purchasers argued that a person already dead at the date of execution of a deed could not take any benefit under it (Re Tilt: Lampet v Kennedy (1896) 74 LT 163). As the Deceased had died at the date of Tsoi Li Shi's assignment, he could not take any benefit under it, and the Property therefore reverted to Tsoi Li Shi under a resulting trust.

16. I accept the principle of law relied upon by the Purchasers but I do not accept its application to the facts of this case.

17. As Mr. Chan, counsel for the Vendor points out, here the assignment did not purport to be made in favour of the Deceased himself. It was expressly made to the Widow "acting in the capacity of the executrix of the estate of [the Deceased]".

18. A gift to the executrix of a dead person is a gift to his personal representative as part of his estate (Theobald on Wills 14th ed. p.424; Trethewy v Helyar (1877) 4 Ch. D. 53).

19. In Trethewy, Jessel M.R. held that a gift made after the death of JC "to the executors or executrix of JC, ￡ 100 "was a gift to the executors to be held as part of the personal estate.

"It is absurd to suppose that when a bequest is made to persons holding such an office the testator intends them to take beneficially. The only reason for making the bequest to them at all is that they shall hold the property bequeathed as the personal estate of the dead man, which makes it their duty to distribute the property so bequeathed as part of his personal estate" (p.56).

20. Mr. Mui for the Purchasers sought to argue that this did not apply to real property, by reference to the caveat in the last paragraph of the judgment.

21. In my judgment, the distinction between real and personal estate for those purposes was by reason of the different treatment of real and personal estates at the date of the judgment in Trethewy. I am supported in this view by the fact that no distinction is drawn in Theobald between real and personal property for the application of this principle.

22. Consequently, the gift to the Widow as executrix of the Deceased's estate did not lapse as would a gift to the Deceased himself.

23. Requisition No.3 was not framed accurately insofar as it suggests that the assignment was to the Deceased himself rather than to his widow as his executrix.

24. This Requisition was satisfactorily answered by the Vendor's Solicitors in paragraph (1) of their letter dated 7 July 1995 when they wrote "it is clear that under the said Assent such property was not vested in [the Deceased] and the other three persons but was vested in [the Widow] as executrix of the estate of the said deceased and the said persons."

25. I therefore accept the Vendor's submission that there was no substance in Requisition No.3.

Requisition No.2: Assent by Widow to self

The Assent

26. By the Assent of 1975, the Widow, after reciting her capacity as executrix and the grant of Probate to her, purported to assent to the Property vesting in herself.

27. The language used of "assent" and "vesting" appears to be pursuant to s.66 Probate and Administration Ordinance cap.l0, although that provision was not expressly mentioned.

28. Section 66 provides that a personal representative may assent to the vesting in any person who (whether by devise, bequest, devolution, appropriation or otherwise) may be entitled thereto, either beneficially or as a trustee or personal representative, of any immovable property to which the testator or intestate was entitled.

29. The Assent here did not state that the Property was vested in the Widow "as a trustee or personal representative". Further, as the Deceased's Will did not appoint her as trustee, and as there is no suggestion that she was personal representative of anyone else.

30. Therefore, the assumption must be that she was purporting to assent to the Property vesting in herself as beneficiary.

31. Thereupon, as we have seen, she and the other co-owners assigned Lot 1305 in D.D.123 to a purchaser as "registered and beneficial owners" .

The Requisition

32. The Purchasers' requisition (on 23 June 1995 and expounded on 5 July 1995) questioned how the executrix could vest unto herself a property by Assent under and pursuant to Probate, when the property was not mentioned in the Probate.

33. As I read it, that was a requisition which went not only to the form of the conveyance, but also to its substance and validity. I see no reason to read it restrictively as a complaint only about the form of the conveyance.

The Answers

34. There was considerable correspondence passing between the respective solicitors. I shall deal with what appear to be the substantial answers only.

35. The Vendor's first answer was contained in a letter from solicitors acting for a predecessor-in-title. These solicitors stated the view that Lot No.1305 in D.D.123 was after-acquired property not passing on the Deceased's death but by virtue of the Assent Memorial No.154213 granted by Tsoi Li Shi to the Widow dated 1 September 1964.

36. Mr. Chan for the Vendor does not place much reliance on this answer and I am not sure quite what it means either.

37. The Vendor's second answer was on 7 July 1995. It wrote that since the Widow acquired the Property as executrix of the estate of the Deceased, she could assent to the vesting of the Property under and by virtue of the provisions of the Probate and Administration Ordinance.

38. However, this second answer was withdrawn on 17 July 1995. The following answer was given:-

"(1) Even if Assent Memorial No.188020 [which should have been No.188029] is not operative then assent to the vesting of the property comprised therein could not be effective and such property was still vested in [the Widow] as executrix to the estate of [the Deceased]. As a result, [the Widow] should have power, as executrix to assign such property to any other person.

(2) Further, [the Widow] is also the sole beneficiary named in the will of the said deceased.

(3) You will, no doubt. aware [sic] that the vendors in Assignment Memorial No.341371 were described as 'registered and beneficial owners'. As a result, [the widow] was deemed to be selling as executrix to the estate of the said deceased and as beneficiary thereof.

(4) In the circumstances, [the Widow]'s share in the property comprised in Assignment Memorial No.341371 could be absolutely assigned to the purchaser, Hui Sai Wing, under the said Assignment. "

39. Mr. Chan expounded this answer before me as follows. He submits that:-

(a) there could not have been an assent under s.66 because the Property did not devolveunder the Will, and the terms of the Will did not govern the Property.

(b) Accordingly, the form of the conveyance was wrong.

(c) However, that was merely a wrong technical name or method, and the document was still good as a conveyance (in re Stirrup's Contract [1961] 1 WLR 449).

40. As for (a), I agree with Mr. Chan that the terms of the Will did not govern the Property for this reason. The Will gives the Widow the business, cash and personal and real property standing in the Deceased's name and left behind by him. The Property would not be included in that category as it was not property standing in the Deceased's name, even if it could be regarded as "left behind" by him.

41. But that view is irrelevant for present purposes. Whether I am right or wrong on that, the Vendor's position is that the terms of the Will did not govern the Property and the Property did not devolve under the Will; hence, the withdrawal of the answer relying on the Probate and Administration Ordinance.

42. As for (b) and (c), I have difficulty accepting Mr. Chan's submissions. If the terms of the Will did not govern the Property, then the fact that the Widow was the sole beneficiary under the Will does not mean necessarily that she was the beneficiary of the Property. The Vendor has not adduced evidence to show that there were no other beneficiaries (e.g. children) who would have been entitled to distribution of the Property upon an intestacy.

43. Mr. Chan argues that this need not concern me as the Requisition only went to the form of the conveyance, not the substance. As I have said, I do not read the Requisition so restrictively.

44. Consequently, the Vendor has failed to show that the conveyance by Memorial No.188029 was to the person who was truly entitled to the Property beneficially.

45. I further do not accept Mr. Chan's submission that paragraph (3) in the letter of 17 July 1995 was a separate answer to the Requisition. As I read the letter, paragraphs (1) to (4) were conjunctive.

46. In any event, the fact that the subsequent Assignrnent describes the Widow inter alios as "registered and beneficial owners" is neither here nor there. No doubt the Widow thought she was the beneficial owner. That was the purport of the Assent. But that does not prove that she was the beneficial owner. And as I have said, I was not shown a copy of that Assignment and I do not know in what context or part of the Assignment that description occurs.

47. The Vendor's answers were not accepted by the Purchasers who by letter dated 21 July 1995 repeated all their previous requisitions and made certain further comments which did not carry the matter further.

48. Contrary to Mr. Chan's submissions, I cannot see from that last letter any waiver of Requisition No.2 (which as I have said, went to both form and substance) or expression of satisfaction with the answers contained in the Vendor's letter of 17 July 1995.

49. The deal then fell through.

Conclusion

50. My conclusion therefore is that the Vendor has sufficiently answered Requisition No.3 but has failed to sufficiently answer Requisition No.2.

51. In the premises, I:-

(1) dismiss paragraph (1) of the Originating Summons;

(2) make an order in terms of paragraphs (2),(3),(4)and (6) thereof;

(3) make an order in terms of paragraph (5) thereof, save that the time for return of the deposit be extended to 14 days from the date of the Order;

(4) dismiss the cross-summons, save that I make no order as to paragraph (3) thereof. If required, I give liberty to apply;

(5) make an an order nisi that the costs be paid by the Vendor to the Purchasers.