CHOW YIM WOON v. LAM YUNG MING SARLINA

CACV 85/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 85 OF 2000

(ON APPEAL FROM HCA 6379/1999)

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J U D G M E N T

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Wong JA: (giving the judgment of the court)

1. On 28 February 2000, Mr Recorder Edward Chan SC dismissed the plaintiff purchaser's application for summary judgment in respect of the sale and purchase of a small house（丁屋）known as ground floor and garden, Section C of Lot No. 1513 in DD 130, Ching Chuen Wai, Tuen Mun, New Territories (we shall call it the property). The plaintiff now appeals.

2. The facts giving rise insofar relevant to the present proceedings can be briefly recounted. On 23 September 1997, the plaintiff as the purchaser and the defendant as the vendor entered into and signed a provisional sale and purchase agreement in respect of the property. A second agreement which appears to be a supplement to the first was signed by the plaintiff and the defendant in their respective capacity as purchaser and vendor on the same day. There was a third agreement called the Formal Undertaking which was signed on 22 October 1997. The parties in this agreement were described as the advance purchaser（訂購人）and promisor（承諾人）respectively. The plaintiff was the advance purchaser and Joinrex Developments Ltd was named as the promisor. It appears to the learned Recorder that the defendant was the person who signed on behalf of Joinrex. But he was not quite clear what was the exact relationship between the defendant and Joinrex.

3. Be that as it may, the plaintiff, in pursuance to the first and second agreements, paid to the defendant a total sum of $490,000 by way of deposits and transfer fees. What subsequently transpired was that on 15 December 1998, the plaintiff's solicitors wrote to the defendant to ask for the progress and also the schedule of the completion of the building. The plaintiff also alleged misrepresentation which was not pursued before the learned Recorder because the issue of misrepresentation would inevitably give rise to triable issues as it is not a matter that could be resolved in a summary way. The plaintiff's solicitors also requested for all the title deeds and related documents of the property for their perusal. Solicitors for the defendant and Joinrex wrote to the plaintiff's solicitors on 7 January 1999 and in relation to the request for title deeds, the solicitors contended that the duty to show good title was within a reasonable time before completion and the request was premature. The upshot was that the plaintiff's solicitors wrote to the defendant's solicitors in a letter that unless the defendant could show good title to the property within 7 days, the plaintiff would consider the defendant's inaction as a breach of agreement. On 5 February 1999, the plaintiff's solicitors demanded the repayment of all the money paid by their client and alleged that the defendant had repudiated the agreement which repudiation the plaintiff accepted. In their reply, solicitors for the defendant and Joinrex again questioned the correctness of the assertion that the vendor need to have any right in the property before he could enter into an agreement for sale and purchase.

4. The learned Recorder dealt with section 35 of the First Schedule of the Conveyancing and Property Ordinance in his judgment which appears at p.11. Mr Chan, who appears for the plaintiff before this Court, submits that this is the main issue in this appeal. The learned Recorder said:

"The Plaintiff also contended under section 35 and the First Schedule Part II of the Conveyancing and Property Ordinance, it was to be implied that the vendor now has a good right and title to assign the land free from encumbrance. When I pointed out to counsel that the First Schedule of the Conveyancing and Property Ordinance only dealt with assignment, it was contended that the word "assignment" was wide enough defined as to include an agreement. It was also contended that the decision of Sung Wai Kiu v. Wong Mei Yin [1997] 1 HKC 288 supported such contention. Suffice is for me to say that plainly the definition of assignment in the Conveyancing and Property Ordinance could not include an agreement and to the extent that Sung Wai Kiu's case could be said to support the contention and the terms set out in the First Schedule of the Conveyancing and Property Ordinance are to be implied into an agreement I am not disposed to follow that decision because I think that it is clearly wrong. I reject this contention."

5. The learned Recorder then went on to say at the same page:

"The Plaintiff also contended that since by terms of the building licence, the registered owner could not enter into an agreement to bind himself to dispose of the property to be built without any risk of the Government's re-entry, the Defendant could not have any interest or right in the property to sell to the Plaintiff. Thus this would be a case that there is a fundamental defect in the Defendant's title to the property and the Plaintiff was entitled to rescind the contract even before completion date. In this respect, the Plaintiff relied on A Mayson Development Co. Ltd v. Betterfit Ltd [1992] 2 HKC 533.

I do not think that the A Mayson Development Co. Ltd's case had any application to the present case."

6. We agree with the views expressed by the learned Recorder.

7. In addition to the views of the learned Recorder which we have quoted, the learned Recorder also formed the view that in the absence of any special provision in the contract, and he found there was none, the vendor is only obliged to show that he has a good title to pass on to the purchaser on completion. This seems to us to be supported by authorities quoted by Mr Liu in his written submission.

8. The learned Recorder also observed that the vendor must give the purchaser reasonable time to consider what was offered to him, which meant that he would have to show a good title and answer the requisition within a reasonable time before completion. He considered Clause 4 of the First Agreement and concluded that it did not have any effect of moving forward the time in which the vendor is to discharge her obligation to show good title.

9. As we have observed that there was no time limit for completion in the present situation, the learned Recorder concluded that the plaintiff had not shown a clear right to rescind under Clause 4. He decided that there was no implied term in the agreement that at the time of the agreement, the defendant, as vendor, must have "some interest, right, and/or capacity etc. to sell the property or alternatively "some authority or some interest derived directly or indirectly from the registered owner" or "the power to bind directly or indirectly the registered owner to sell the property.

10. The decision of Li Pui Wan v. Wong Mei Yin [1997] HKLRD 1141 was cited by Mr Chan in support of his argument. This case is distinguishable on a ground that the formal undertaking was not given by the defendant, it was given by a different party called Joinrex Development Co. Ltd. It seems clear to us that the decision in Li Pui Wan v. Wong Mei Yin cannot be relied upon by the plaintiff to support his case. There was also the status of Joinrex and its relationship with the defendant to consider. The learned Recorder concluded that there were issues to be decided in a trial. We agree and dismiss the plaintiff's summons.

11. It is not necessary for us to refer to the matters set out in the Notice of Appeal or matters set out in the written submission of Mr Liu who appears for the defendant and Joinrex before us. The case, in our view, is plain.

12. There are substantial issues of law and fact which can only be resolved in a trial and cannot be disposed of by way of summary procedure. At the end of the day, the plaintiff may win in the action but that is a different matter. For present purposes, it is worth to remember what Rogers JA said in Ng Lung Sang Anita v. Lam Yuk Lan [1999] 4 HKC 106 which was referred to in Mr Liu's written submission. The learned judge said at p.111:

"I would like to say, however, a few words about the procedure which has been adopted. No doubt, the purchaser wishes to retrieve the deposit plus the costs and expenses which have been incurred and it is in everybody's interest this matter is disposed of quickly. It is however, a myth to consider that O.86 or even O.14, proceedings will necessarily speed matters up.

Those advising clients ought to be very cautious before commencing O.86 and O.14 proceedings. They are there only for clear and obvious cases. The old adage that if you have to sit down, it is not a case for O.14 is equally applicable today as it was when it was first coined."

13. We respectfully agree. In our view, there is no substance whatever in this appeal and it must be dismissed with costs.