CHAN CHI WAI AND ANOTHER v. NG SAU MEI MAY AND ANOTHER

HCMP 1468/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1468 OF 2006

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J U D G M E N T

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1.  This is a vendor and purchaser summons taken out by the vendors.  The defendants are the purchasers.  The property is a flat in South Horizons, Ap Lei Chau, Aberdeen. 

2.  The sale and purchase agreement was made on 29 September 2005.  Completion was supposed to take place on 18 October 2005.  The agreement required the vendors to give the purchasers a good title to the property.  Requisitions and objections to title had to be raised within seven working days after the receipt of the title deeds and documents. 

3.  The title deeds and documents were furnished by the vendor’s solicitors to the purchaser’s former solicitors on 4 October 2005.  Amongst the title deeds was a Deed of Release (“the Release”) given by a former mortgagee, BA/CA Capital Management Limited (“the Mortgage”).  The Release was executed by two gentlemen, Messrs Paul Giles and Philippe Hone Chung Yin Yeung Cho, as attorneys of the mortgagee.

4.  By a letter dated 13 October 2005, the purchaser’s former solicitors raised a number of requisitions on the title of the property.  One of the requisitions asked for a certified copy of the power of attorney which appointed Messrs Giles and Yin as attorneys of the Mortgagee.  This requisition was not resolved before the scheduled date of completion and completion was postponed by agreement of the parties.  The vendors also granted the purchasers a licence for them to occupy the property pending the resolution of this requisition.  This requisition is the only issue in these proceedings.

5.  On 3 January 2006, the vendor’s solicitors furnished the purchaser’s former solicitors a statutory declaration by Mr Lau Tai-chim, solicitor, made on 29 October 2005.  Mr Lau’s firm acted for the Mortgagee in the release of the property from the mortgage and the execution of the Release.  The statutory declaration was furnished as secondary evidence of due execution of the Release (see Leung Kwai Lin v Wu Wing Kuen [2001] 1 HKLRD 212 at 217E to 219H and 220I to 222C, and Wu Wing Kuen & Others re Leung Kwai Lin & Anor [1999] 3HKLRD 738).

6.  Mr Lau said in his statutory declaration as follows:

“2. On or about 8 March 2001, I received from BA/CA Capital Management Limited, the reassignor, the Release duly executed by the said reassignor.  Together with the Release, there were enclosed some powers of attorney authorising the representatives of the said reassignor to execute the Release on behalf of the various reassigning parties named therein.  On receipt of the Release, I immediately arranged to send it to the purchaser’s solicitors, Messrs K. Y. Lo & Co. on the same day.

3. To the best of information and knowledge, I checked the contents of the powers of attorney and I was satisfied that the contents of the powers of attorney were in order and they were duly executed or presumed to have been duly executed by the proper law governing them and their representatives, namely, Paul Francis Giles and Philippe Hone Chung Yin Yeung Cho, were duly authorized to execute the Release on behalf of the said reassignor by a Power of Attorney duly executed by the said reassignor within the period of one year prior to the date of the Release.

4. Recently, I have searched my file for the power (sic) of attorney but could not find them.  I verily believe that my firm has misplaced or lost the powers of attorney and they cannot be found.”

7.  The purchaser’s former solicitors were not satisfied with this statutory declaration.  They wrote to the vendor’s solicitors on 9 January 2006 and said:

“…  The Statutory Declaration does not explain in detail whether the power conferred to representatives, Paul Francis Giles and Philippe Hone Chung Yin, was derived from one single power of attorney or separate powers of attorney or substitution(s) or delegation(s), given the fact that several powers of attorney were sent to Mr Lau on or about 8 March 2001, see paragraphs 2 and 3 of the Statutory Declaration.  In this respect, we shall be much obliged if you will furnish us with copy of the correspondence between BA/CA Capital Management Limited and Mr Lau relating to the return of the executed Release and delivery of the powers of attorneys for our perusal.  Further, it was stated in paragraph 3 of Mr Lau’s Statutory Declaration that the powers of attorney were duly executed or presumed to have been duly executed, please clarify in what circumstances justified Mr Lau to consider that the powers of attorney were duly executed or presumed to have been duly executed as alleged.  After all, we are of the view that Mr Lau should also explain, to the best of his ability, how the powers of attorney have come to be lost.”

8.  Mr Lau’s firm then supplied the vendor’s solicitors a letter from the Mortgagee dated 5 March 2001, which read:

“We refer to your letter dated 3 March 2001 and are pleased to enclose herewith the duly executed Deed of Release for your further action.

Kindly acknowledge receipt by signing and returning the duplicate copy of this letter to us at your earliest convenience.”

9.  The purchaser’s former solicitors wrote again on 3 April 2006 and commented on the letter from the Mortgagee as follows:

“We note from the letter dated C. Lau & Co. that there is no power of attorney attached under cover of the said letter.  As BA/CA Capital Management Limited has never granted any power of attorney to Philippe Yin and Paul Giles to execute the Deed of Release Memorial No. UB8346014, your allegation that a certified copy of the said letter, the statutory declaration of Lau Tai-chim dated 29 December 2005, and the proposed supplemental statutory declaration of Lau Tai-chim constitute sufficient proof of due execution of the said Deed of Release are not acceptable.  We repeat this requisition.”

10.  Mr Lau commented on this letter on 4 April 2006.  He said:

“Although there is no mention of any power of attorney enclosed in the letter of BA/CA Capital Management Limited dated 5 March 2001, to the best of our recollection we had sight of the power of attorney somewhere sometime.  The other matter that we would like to mention is:  if BA/CA Capital Management Limited is now no longer in existence or being wound-up, then there is no or no real risk of this mortgagee claiming the mortgage money again or bringing any enforcement action against the mortgagor on the mortgage.”

The mortgagee had in fact been deregistered under section 291AA of the Companies Ordinance, Cap. 32, on 26 March 2004, upon its own application, but its registration could be reinstated under section 291AB.

11.  Mr Lau then made a supplemental statutory declaration on 6 April 2006 as follows:

“(2) To the best of my information, knowledge and recollection:

(a) On or about 8 March 2001, I received from BA/CA Capital Management Limited, the reassignor, the Release and a certified true copy of the power of attorney authorising the representatives of the reassignor to execute the Release on behalf of the various reassigning parties named therein.

(b) The power of attorney was executed by the reassignor under its common seal and was signed by two directors and in such event it should be presumed to have been duly executed by the reassignor.

(c) I then arranged for the insertion of the names of the representatives, namely, Paul Francis Giles and Philippe Hone Chung Yin Yeung Cho to the appropriate space of the execution page of the Release.

(3) As it now transpires that the Release was delivered to K. Y. Lo & Co. without the certified copy of the power of attorney, it must have been misplaced and/or mislaid in the office of my firm at the relevant time.

(4) Despite diligent search has been conducted in the office of my firm, the certified copy of the power of attorney cannot be found and thus have (sic) been lost.”

12.  The purchasers were still unsatisfied.  They had three questions on the two statutory declarations.  The questions are repeated in their counsel’s skeleton submissions:

“(1) the statutory declarations, read together, are unclear as to whether the power conferred to the attorneys was derived from one single power of attorney or separate powers of attorney as Mr Lau refers to “some powers of attorney” in his first statutory declaration as well as “power of attorney” in his second statutory declaration;

(2) the statutory declarations are silent as to how the power(s) of attorney may have been lost; and

(3) disclosed copies of correspondence from the records of Messrs T. C. Lau & Co. do not record that the power(s) of attorney in issue had been sent to Messrs T. C. Lau & Co.  In particular, a letter dated 5 March 2001 from BA/CA Capital Management Limited, the reassignor, records the delivery by it to Messrs T. C. Lau & Co. of “duly executed Deed of Release” but no mention is made in the letter of any power(s) of attorney or that the Release was executed pursuant to it.”

13.  Since these are matters of credibility, Mr Lau was asked to give viva voce evidence and be cross-examined on these matters. 

14.  Regarding the first question, Mr Lau said that he could not remember if there was one or two powers of attorney.  However, he had checked the power(s) and was satisfied that the attorneys had been duly appointed and the Release duly executed by them.  These were matters of his concern.  He said he had also checked the signatures of the attorneys as appearing in the power(s) and the Release and was satisfied that the execution of the Release was also in order.

15.  Regarding the second question, he said he could not tell how the power(s) had been lost. 

16.  Regarding the last question, he said in addition to the power(s), the Mortgagee’s letter of 5 March 2001 also enclosed a certified copy of the minutes of meeting of the Mortgagee dated 8 December 1997, but the letter was also silent as to the enclosure of these minutes.

17.  It is indisputable that there was indeed such a copy of the minutes, as it is now part of the title documents furnished by the vendors to the purchasers. 

18.  Mr Lau is an experienced conveyancer.  I have no doubt that he would have ensured that there was a power(s) of attorney which had duly appointed the attorneys to execute the Release.  His evidence is clear and straightforward. 

19.  The lack of any mention in the Mortgagee’s letter of 5 March 2001 about the power(s) of attorney at one time was a matter of concern.  However, the existence of the copy of minutes of the Mortgagee dated 8 December 1997, which was also not mentioned in this letter, has laid this concern to rest.  In fact, the Mortgagee’s letter of 5 March 2001 referred to the Release as “the duly executed Deed of Release”.

20.  In the light of all these, I accept Mr Lau’s evidence.  I find that Mr Lau’s statutory declaration and supplemental statutory declaration are clear and cogent evidence that there was a duly executed power(s) of attorney which duly appointed the attorneys who executed the Release and that such power(s) had been lost.

21.  Finally, Mr Lau, at my suggestion, furnished a copy each of a letter dated 19 January 2001 from the Mortgagee to his firm and his firm’s reply to the Mortgagee dated 28 February 2001.  The Mortgagee’s letter read as follows:

“We refer to your letter of 12 January 2001 and are pleased to enclose herewith the relevant title deeds and documents as per schedule attached for your further action.  We also authorise you to release the relevant title deeds and documents relating to the said property to the purchaser upon full redemption of the outstanding loan with us.

In the meantime, we would like to inform you that the total principal and interest payable as at 28 February 2001 is HK$1,601,068.86 and HK$1,973.92 respectively, totalling HK$1,603,042.78.  Please deliver your cheque to our office on/before 3.30 pm in settlement.  Kindly confirm with us in advance on the exact amount payable upon final redemption of the captioned loan.”

22.  The reply of Mr Lau’s firm read:

“We refer to your letter dated 19 January 2001 and write to send you herewith a cheque for the sum of HK$l,603,042.78, being redemption money calculated up to 28 February 2001 as requested and Deed of Release to legal charge Memorial No. 6029571 and transfer of mortgages Memorial Nos. 7835705 and 8226942 for your execution and return.  We confirm that all rates, management fees and government rent during the mortgage period have been fully paid.  We undertake to settle all arrears of the same should you be called upon to pay as mortgagee.

We shall be grateful if you will return the said Deed of Release within the next 14 days for our further handling.”

23.  Two copy cheques for the sums of $962,000 and $641,042.78 (totalling HK$l,603,042.78), both dated 28 February 2001 and issued by the vendor’s solicitors (who represented the vendors in their purchase of the property in 2001), were also enclosed in this letter to the Mortgagee.  In the premises, I also hold that the title of the property is not exposed to any real risk of challenge by the Mortgagee. 

24.  In the premises, I declare that the plaintiffs have sufficiently and satisfactorily answered the requisitions and objections raised by the defendants’ former solicitors on 13 October 2005 in respect of the plaintiffs’ title to the property.

Discussion on Costs

25.  The parties have agreed that I should make no order as to costs and I therefore refrain from making any such order.