KAN WING YEE WENDY v. ROH JULIE KIM

HCMP 352/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 352 OF 2017

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JUDGMENT

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Introduction

1.  This is a vendor-purchaser summons[1] taken out by the plaintiff (P) as vendor against the defendant (D) as purchaser regarding the sale and purchase of a flat on Lockhart Road, Hong Kong (“the Property”).  P seeks declaratory reliefs,[2] whilst D by counter-notice seeks rescission of the contract and return of the deposit paid.[3]

2.  Although a number of requisitions had been raised by D’s solicitors, only one of them eventually becomes the subject matter in the present proceedings which is about an old letter of nomination made on 25 June 1979 (“the LN”).[4] It is common ground between the parties that the LN has raised a presumption of resulting trust.  The issues that this court has to decide are:

(a) whether P has already adduced sufficient evidence to rebut the presumption; and

(b) if not, whether any action based on the resulting trust would have been time-barred so that D would not be facing the risk of a successful assertion in that regard.

Ms Ma, counsel for D, has agreed that issue (b) would not arise if issue (a) is to be answered in P’s favour.

3.  The requisition under consideration is in the following terms:[5]

“ Letter of Nomination dated 25 June 1979 (copy enclosed)

In the above letter, [Poon] requested the Vendor [Leung] to execute the Assignment in relation to the captioned property to [Kong KS] and [Chan] as tenants in common in equal shares. The presumption of resulting trust arises in favour of [Poon] and the above letter is evidence of an interest in the captioned property vested in [Poon] from a resulting trust.  Please let us have the evidence to rebut the presumption of a resulting trust in favour of [Poon] and let us know what steps you would take to cure the blot on title.”

Background

Chronology of Events

4.  It would be convenient for me to first set out the relevant conveyancing history which I gratefully adopt from the written submission of Ms Ma as follows:

8 May 1979	By an agreement for sale and purchase,[6] Leung agreed to sell and Kong KS and Poon agreed to purchase (as tenants-in-common) the Property at $163,000, of which $33,000 was paid by the two purchasers as deposit.[7]
25 June 1979	By the LN, Poon requested Leung to execute the assignment to Kong KS and Chan as tenants-in-common.  The execution of the LN was witnessed by a solicitor William Lo, a partner in Messrs W S Lo & Yeung (“WSLY”).[8]
12 July 1979	The Property was assigned by Leung directly to Kong KS and Chan as tenants-in-common.[9]
10 June 1981	Chan assigned her half share in the Property by way of  sale to Kong SC who held it on trust for Kong KS.[10]
20 June 1981	Kong SC assigned her half share in the Property to Kong KS, as a result of which the latter became the sole legal owner of the Property.[11]
17 October 1994	The Property was vested in Poon WH as executor.[12]
25 March 1995	The Property was assigned by the executor to P as a purchaser at the price of $900,000.[13]
Late 1996	P attempted to sell the Property but the transaction eventually fell through: see the judgment of Findlay J (“the Judge”) in Chan Sze Yuen and Shum Yu Son v Kan Wing Yee Wendy.[14]
27 July 2001	P on the one part and Chan Sze Yuen and Shum Yu Son on the other entered into a Cancellation Agreement cancelling their agreement for sale and purchase made on 23 December 1996.[15]
17 August 2016	P and D entered into a Sale and Purchase Agreement (“SPA”) at the price of $4,700,000,[16] D having paid a deposit of $235,000.[17]

Correspondence between solicitors

5.  After the SPA was signed, there were a number of correspondence between TLLT (P’s solicitors) and KNC (D’s solicitors).  In the summary below, I will focus on the requisition about the LN which is now under consideration:

17 August 2016[18]	KNC raised with TLLT, among other things, the requisition about the LN quoted above.
26 August 2016[19]	TLLT replied that as almost 40 years had elapsed, any cause of action by Poon would be time-barred.
1 September 2016[20]	KNC argued that any cause of action taken by the beneficiary against the purchaser would not be time-barred pursuant to s20 of the Limitation Ordinance, Cap 347.[21]
7 October 2016[22]	TLLT replied, by referring to Rose Palace Ltd v Jung Christopher Lam,[23] that they would see if it was the practice of WSLY that they would explain to a nominator that his interest in the property would cease upon nomination and if so, whether a statutory declaratory would be made to cover that.  Alternatively, TLLT argued that s 20(1) of the Limitation Ordinance was not applicable, as P was not a trustee for the purpose of that provision and that any potential claim by Poon would have been time-barred by s 7(2) of the same ordinance.[24]
14 October 2016[25]	KNC enquired whether WSLY had given a reply and said that without the relevant statutory declaration by William Lo, the Limitation Ordinance alone could not help P.
31 October 2016[26]	TLLT reported that William Lo had passed away and that WSLY was making enquiry.  TLLT asked for a postponement of two weeks for completion.  TLLT did not agree that the presumption of resulting trust in Poon’s favour could not be rebutted without William Lo’s statutory declaration.
7 November 2016[27]	KNC chased for the reply from WSLY and repeated their requisition.
21 November 2016[28]	TLLT sent KNC a statutory declaration made by Yeung, the current sole proprietor of WSLY, who said that his former partner William Lo had passed away in 2015 and the handling law clerk, Leung JC, had also retired and whose whereabouts were unknown.  Yeung, said, however, that it had always been the invariable practice of the firm that when interpreting a nomination, the responsible solicitor or law clerk would explain to the nominator that his/her interest in the property shall cease upon execution.  Yeung said that he had no reason to believe that in the present case the said invariable practice had not been followed by either William Lo or Leung JC.
30 November 2016[29]	KNC replied by saying that the decision of the Judge in HCMP 311/1997, which directly related to the Property, remained a decision against P’s ability to give a good title.  KNC said further that since P’s attempt to sell the Property had fallen through twice,[30] they intended to take out a vendor and purchase summons.
19 January 2017[31]	TLLT replied that the statutory declaration of Yeung was sufficient to rebut the presumption of resulting trust and also reiterated their position in their letter dated 7 October 2016 regarding time limitation.  They said that P was ready, willing and able to complete and demanded that the completion be done on or before 5 pm on 26 January 2017.
24 January 2017[32]	KNC did not accept that the requisition under consideration had been satisfactorily answered.  They said that D was ready, willing and able to complete provided that P could provide evidence which would, in their view, be sufficient to rebut the presumption of resulting trust in Poon’s favour.

The relevant legal principles

Good title

6. It is well-settled that the burden is on the vendor to prove and show a good title.  It is also well-established that a good title does not mean a perfect title, ie, one that is free from any blemish.  The test is as stated by Lord Russell in MEPC Ltd v Christian Edwards:[33]

“ In my opinion if the facts and circumstances of a case are so compelling to the mind of the court that the court concludes beyond reasonable doubt that the purchaser will not be at risk of a successful assertion against him of the incumbrance, the court should declare in favour of a good title shown.”

7.  In Mariner International Hotels Ltd v Atlas Ltd[34], Bokhary PJ, with whom the other judges agreed, citing Chi Kit Co Ltd & Anor v Lucky Health International Enterprise Ltd[35] and Jumbo Gold Investment Ltd v Yuen Cheong Leung & Anor[36], explained further that the general test for proof of title is whether there is a real risk of a successful assertion against the purchaser of an incumbrance and that a real risk in this context means a risk that is not merely fanciful.

8.  As to whether a good title has been proved, the question must be approached from the stand-point of a willing purchaser and a willing vendor, both possessed of reasonably robust common sense, both intending to see the transaction through to completion in terms of their own bargain: see Mexon Holdings Ltd v Silver Bay International Ltd.[37]

Requisitions

9.  The duty of a vendor’s duty to answer his purchaser’s requisitions so as to show good title is distinct from his duty to pass good title.  Thus, it was said by Le Pichon J (as she then was) in Lord Energy Limited v Chen & Another[38], citing Kok Chong Ho v Double Value Development Ltd[39] and Active Keen Industries Ltd v Fok Chi-keong[40], that:

“ It has to be borne in mind that at the requisitions stage, the obligation is upon the vendors to show good title by satisfactorily answering requisitions irrespective of the vendors’ ability to pass good title on the date for completion.”

The reason for the above is that it is upon the answer to the requisition that a purchaser has to decide whether to accept the vendor’s title: Polyson Jewellery Co Ltd & Anor v Carlos Liu Song.[41]

10.  Moreover, the law is clear that requisitions raised by a purchaser must be satisfactorily answered in reasonable time before the scheduled completion date.  In Active Keen Industries Ltd v Fok Chi-keong[42] Litton JA (as he then was) said:

“ Obviously, if a purchaser raises a substantial objection as to the vendor’s title and there are facts within the vendor’s knowledge which, if revealed, might meet the objection, and the vendor chooses to withhold that from the purchaser, the vendor clearly cannot, on the day fixed for completion, turn round and say to the purchaser: ‘Now I will both show you a good title and make you good title; you pay the balance of the purchase price today or I will rescind.’ The purchaser must be given reasonable time to consider the title of the vendor and his own position; the implied obligation of showing a good title would not have been discharged by disclosure on the day fixed for completion.

But assume the objection to have no substance. In such a case, as Godfrey, J. remarked, this presents considerable difficulties. Is it enough for the vendor to say: ‘there is no substance in the purchaser’s objection’?…

   … If the matter was self-evident, the purchaser’s solicitor cannot insist upon a fuller reply.  But the vendor’s solicitor must act with total candour, so that the purchaser can be reasonably certain that there are no facts and material relevant to the requisition known to the vendor which have not been disclosed.  A requisition as to title is not an occasion for the parties’ solicitors to bandy propositions of the law: each party must decide for himself, ultimately, what the legal position is, based upon the facts known to himself: although, obviously, if one party can persuade the other to his own point of view on the law, so much the better.”

Proper conveyancing evidence

11.  In order to satisfied himself with the vendor’s title, the purchaser is entitled to demand “reasonable proof” thereof.  What is necessary is “proper conveyancing evidence” which may not be the best evidence.   Depending on what the purchaser’s requisition is about, this can be in the form of a statutory declaration by a person who is able to declare the truth of the facts stated therein.  Circumstantial evidence is a pointer to certain facts.  However, a pointer is not evidence.  Circumstantial evidence is not sufficient and proper conveyancing evidence demands more than this.  It demands some other evidence which will satisfy the purchaser, and any purchaser from him, that the title is a good one.  In the words of Godfrey J (as he then was), the court is not entitled to force a doubtful title upon the purchaser: see Lam Kin I v Tsui Ming Yee.[43]

Time limitation

12.  It is now settled law in Hong Kong that a person is not a “trustee” for the purpose of s20(1) of the Limitation Ordinance, if his liability is merely ancillary to that of the primary trustee, such as for knowing receipt of misapplied trust property or dishonest assistance in a breach of trust.  He is a “non-fiduciary”: see the judgment of the Court of Final Appeal in Peconic Industrial Development Ltd v Lau Kwok Fai[44], applying Paragon Finance Plc v DB Thakerar & Co[45]; Timmerton Co Inc v Equity Trustee Ltd[46]; and the judgment of the UK Supreme Court in Williams v Central Bank of Nigeria[47]. 

13.  As such, an action by a beneficiary to recover trust property from a “non-fiduciary” is generally subject to a time limitation of 6 years from the date on which the right of action accrued: see s20(2), the Limitation Ordinance; and Mo Ying v Brillex Development Ltd[48].  As regards an action to recover land, the applicable time limitation is one of 12 years from the date on which the right of action accrued: see s7(2).  By s2, “land” includes any legal or equitable estate or interest in land.  By s10(1), subject to s20(1), other provisions in the Limitation Ordinance also apply to equitable interests in land.

14.  By s17, the Limitation Ordinance,[49] the effect of the expiration of the statutory period is not only to bar a claimant of land of his remedy, but also to extinguish his title to the land.  This is illustrated by Fairweather v St Marylebone Property Co Ltd,[50] which was cited with approval in Chan Tin Shi v Li Tin Sung & Ors.[51] In Fairweather’s case,  it was held that when a squatter dispossesses a lessee for the statutory period, it is the lessee’s right and title as against the squatter that is finally destroyed but not his right or title as against persons who are not or do not take through the adverse possessor. 

Problems created by HCMP 311/1997

15.  D perceives difficulties accepting P’s title because of the decision of the Judge in 1997 which also involved P and the Property.  On that occasion, the same point about the LN and the presumption of resulting trust in Poon’s favour was raised.  Unlike the present case, P did not rely on any statutory declaration on that occasion but tried to counter the presumption of resulting trust only by a limitation defence, which the Judge found to be “not a good one”.  His lordship’s reasons were as follows:

“[10.] The property was assigned to [Kong KS] and [Chan] on 12 July 1979. On 19 June 1981 [sic], [Chan] assigned her share to [Kong SC]. This would have been in breach of trust if Mr Poon was a beneficiary, but that was not the only breach of trust giving rise to a cause of action. On 20 June 1981, [Kong SC] assigned his share to [Kong KS]. On 17 October 1994, the property was assigned to the executor who assigned it to the defendant on 25 March 1995. Another cause of action based on a breach of trust arose on 25 March 1995, and that cause of action is not time-barred.” (Emphasis supplied)

16.  As the Judge held that there could be a “breach of trust” as late as in March 1995 arising from the assignment by the executor to P, time limitation would not present any problem to Poon.  The decision of the Judge was very brief and concise and the above paragraph was the only place where his lordship dealt with the argument on time limitation.  No statutory provisions or case authorities were cited in support of the decision.  In my humble view, it is because of this brevity that gives rise to several possible readings of the paragraph quoted above:

(i) the series of transfers from Chan to Kong SC onwards were all incidents of “breach of trust” by trustees so that Poon might have a cause of action for recovery of his trust property (the share interest) against any of the trustees without being subject to any time limitation: s20(1)(b), the Limitation Ordinance;

(ii) only the assignment from Chan to Kong SC and the one from the executor to P were incidents of “breach of trust”.  Since the latter only came into being as late as in 1995, time limitation would not be issue regarding the case before his lordship as it had not been expired; and

(iii) as Ms Ma now contends, the Judge had s20(2) (which applies to the recovery of land by a beneficiary against non-trustees) in mind and that his lordship was saying that the assignment by the executor to P in 1995 would give Poon a “new” cause of action so that the time started to run again from that point, whether or not any of Poon’s causes of action arising from the previous transfers had been time-barred.

17.  In my humble view, reading (i) was the meaning that the Judge was trying to convey.  My reasons are as follows: 

(a) reading (i) is the more natural and plain reading among the three;

(b) since the Judge categorized both the assignment by Chan (of her half share) to Kong SC on 10 June 1981 and the assignment from the executor to P on 23 March 1995 as incidents of “breach of trust”, by parity of reasoning the Judge should have similarly categorized the transfers in-between, namely from Kong SC to Kong KS and then from the latter to the executor.  Thus, reading (ii) is not probable;

(c) the probability of reading (i) is also reinforced by the fact that the then existing local case law had made no clear distinction between the two classes of constructive trustees as described by Millett LJ in the Paragon’s case;^[52]

(d) if reading (i) was what the Judge meant, then it could explain why his lordship did not address the following issues, as in his view they simply would not arise:

(1) if Kong SC was not a trustee, whether any action by Poon against the former arising from the assignment from Chan (of her half share) in June 1981 would have already been time barred by the operation of either s20(2) or s7(2) and that any interest that Poon may have had in the Property as against Kong SC (and the people who took through him) would have been extinguished by the operation of s17; and

(2) if neither the executor nor P was a trustee, then in what way they could have committed a “breach of trust” against Poon;

(e)  as regards reading (3), since the Judge mentioned “breach of trust”, it is unlikely that his lordship had s20(2) in mind which is about actions against non-trustees.  Secondly, it is unlikely to have been the Judge’s decision that a purchaser for value (with notice), like P, could never pass good title to her subsequent purchasers; otherwise, that decision would be inconsistent with another decision of his less than two years before in 1995, namely Yeung Kit Lam & Wong Sau Fun v Lau Yiu Shing[53] which dealt with a similar problem of nomination and resulting trust.  In that case, the Judge held (albeit obiter) that even if a resulting trust existed, it could not affect the ability to give good title of the successor-in-title of a purchaser from the trustees.  The Judge said that that was because any fraud of the trustees would not be imputable to the purchaser from the trustees and therefore s20(1)(a) had no application.  Reference was made to Thorne v Heard & Marsh[54].  I note, however, that Yeung Kit Lam & Wong Sau Fun v Lau Yiu Shing was not mentioned in the Judge’s 1997 decision against P and therefore there was no explanation from the Judge as to the difference between his two decisions.

18.  In any event, in my humble view the result of the 1997 decision would have been different if it were heard today.  Firstly, based on Peconic’s case, assuming that there was a resulting trust in Poon’s favour, only Chan could possibly be a “trustee” for the purpose of the exceptions provided for in s 20(1) of the Limitation Ordinance. Chan’s successors-in-title could only be “non-fiduciaries” even if any of them had actual or constructive knowledge of the resulting trust.  Secondly, by the elapse of time since June 1981, any action that Poon may have as against Kong SC, be it for recovery of his interest in the Property or in respect of any breach of trust, would have in any event been time barred by June 1993, whether it is by operation of the shorter time limitation of 6 years in s20(2) or the longer one of 12 years in s7(2), Limitation Ordinance. Moreover, the effect of s17 would be to extinguish Poon’s title to the Property as against Kong SC.  This would bear on whether Poon would still have a subsisting cause of action against P or people who took through her.

The present transaction

Conveyancing evidence

19.  Although in the present case there is the statutory declaration of Yeung, as pointed out by Ms Ma, the former was neither the handling solicitor or the law clerk.  Moreover, Yeung only joined W S Lo & Co in early 1991 as an assistant solicitor, by which time the Law Society Circular 132 of 1990 had already been in operation.   I note that Yeung has filed an affirmation[55] in support of P saying that he based what he said in the statutory declaration on the working experience he had with William Lo between 1991 and July 2015 (when the latter passed away), during which he would consult the latter from time to time as to the firm’s usual and normal practice in conveyancing matters and others, including conveyancing files previously handled by the latter going as far back as 1970s.  The present situation therefore bears some resemblance with the facts in Rose Palace Ltd v Jung Christopher Lam, supra, where the seller sought to rely on the statutory declarations of a solicitor as to what his conveyancing clerk (who had left the employment and could not be traced) should have confirmed with the nominators based on the invariable practice of his law firm and that he had no reason to doubt that the conveyance clerk had followed that invariable practice.

20.  In the present case, I can see no reason to doubt the credibility of Yeung.  The issue about his evidence is a matter of weight, namely whether what he has said in his statutory declaration is sufficient to displace the presumption of resulting trust in Poon’s favour.  This is a fact-specific question.  In this regard, although circumstantial evidence is just a pointer, in my humble view it does not mean that the court cannot take it into account when assessing Yeung’s evidence.  To the contrary, the weight of the case authorities is to the contrary, that is, circumstantial evidence has consistently been considered when assessing the weight to be given to statutory declarations.   This is illustrated by the decision of the Judge in Yeung Kit Lam & Wong Sau Fun v Lau Yiu Shing when his landlord said:[56]

“[14.] There is evidence from Mr Yeung Pak Lung, the senior conveyancing clerk, that Mr Leung had no intention of retaining any interest in the property.  I must say that this evidence does not surprise me in the least.It is, in my view, strongly supported by the probabilities.

[15.] In this case, it can be said that it is proved that Mr Leung Wing Yu paid no more than an equal share of $21,882; that is, $10,941, in respect of a purchase price of $437,640. Any resulting trust in favour of Mr Leung can be, on the evidence before me, no more than in respect a one-fortieth undivided share of the property. The assignment of the property to Mr Lau and Madam Cheng was, it must be presumed, in equal shares. In the assignment, they were described as ‘the Purchaser’, and it was said that the vendor had agreed to sell the property to them. In these circumstances, is there any reasonable possibility that, when Mr Leung signed the nomination in favour of Madam Cheng, he intended anything other than to transfer to her all his interest in the property absolutely, in law and equity? I think not. I believe that Mr Leung would be astonished to hear that the law might say, at this time, that he had a one-fortieth undivided share in the property. That he had no intention of retaining any interest in the property is supported further by the fact that he has taken no steps to exercise any rights. If he had intended to retain an interest, one would have expected him to wonder, from time to time, what was happening to the property in which he had such an interest. If he had taken the most elementary of steps, he would have found out that his ‘trustee’ sold the property in September 1986. If he had done so, we would have heard about it if he remained unsatisfied.

[16.] I am satisfied, on the evidence and the probabilities, that, when Mr Leung signed the nomination form 2 March 1983, he had no intention whatsoever of retaining any kind of interest in the property.”

21.  I note that Yeung Kit Lam & Wong Sau Fun v Lau Yiu Shing was about a statutory declaration made by the handling conveyancing clerk.  However, Rose Place Ltd v Jung Christopher Lam goes a step further, as the solicitor who made the statutory declarations was not the one who personally handled the transaction in question.  In that case, L Chan J said:[57]

“ 18. Regarding Mr Yim’s point on lack of any action by Wu for over 24 years since his execution of the memorandum on 12 October 1988, I have doubts about this point when considered in isolation. This is not a limitation point but a rebuttal of presumption point. I would not lightly hold that the lack of subsequent action by the person, in favour of whom a resulting trust by presumption could have arisen, can without more rebut the presumption ab initio. Mr Yim has not cited any authority to that effect. It is also uncertain how many years of inaction would be enough to invoke the rebuttal ab initio.

19. I would however say that the two declarations by Mr Ong,if not enough to rebut the presumption beyond reasonable doubt for the reasons/deficiencies referred to by counsel for the defendants (save the last one which has been dealt with), then the lack of any action by Wu to claim or enforce any interest in the flat under resulting trust for over 24 years would have strengthened the case built up by the two declarations to the requisite standard of proof.”

22.  From the passages quoted above, the courts had taken into account: (i) the small portion of the undivided shares which would be the subject matter of the resulting trust; and (ii) the inaction of the supposed beneficiary for a prolonged period of time.  The weight to be given to these two pointers is also a fact-specific question.

23.  In the present case, there is no dispute that the distribution that Poon would have made for the deposit would be just about 10% of the total purchase price of the Property.  Moreover, since the execution of the LN there had been several transfers of the interest in the Property, all of which would have come to his knowledge if he had the intention to retain any interest in the Property. However, nothing had been heard from Poon for the past 38 years ever since the execution of the LN.  By applying a reasonably robust common sense to the present facts, the two aforesaid pointers would have strengthened the effect of the statutory declaration of Yeung (that Poon had no intention to retain any interest in the Property) to the requisite standard of proof.  This is so, even without relying on what was said in Yeung’s affirmation which was only filed after the Vendor and Purchaser Summons was taken out.

24.  Based on the above, I find that the presumption of resulting trust arising from the LN in Poon’s favour has been rebutted by the conveyancing evidence adduced by P during the requisition stage and that the requisition under consideration has been answered satisfactorily.

Time limitation

25.  In case I were wrong on the point about the sufficiency of the conveyancing evidence, I would also consider P’s argument on limitation.

26.  Ms Ma has agreed that if there was a resulting trust in Poon’s favour so that Poon may have a cause of action against P, Poon would not be able to pray in aid s20(1) of the Limitation Ordinance, as P was not a trustee for the purpose of that provision.  She has also agreed that any action that Poon might have against P would have long been time-barred, the assignment to P having been made on 25 March 1995 which has been over 22 years by now.  However, Ms Ma submits that Poon may still have a “new” cause of action against D (as a purchaser from P) for recovery of trust property.  This is because, so the argument goes, the sale by P to D would constitute a fresh violation of Poon’s interest under the resulting trust.  For this legal proposition about the “new” cause of action, Ms Ma relies solely on the paragraph in the Judge’s decision in 1997 quoted above. 

27.  With respect, I am unable to accept Ms Ma’s submission above:

(a) insofar as the Judge’s decision relied on s20(1), the Limitation Ordinance, that reliance can no longer be sustained;

(b) despite the diligence of counsel, they are unable to find any clear case authorities which may support Ms Ma’s proposition apart from the Judge’s 1997 decision against P.  However, the latter was a very short judgment which does not refer to any statutory provisions or case authorities. Moreover, as discussed above, that decision is explicable on a different basis and that it does not in fact support Ms Ma’s proposition; 

(c) if, as the Judge said, the first “breach of trust” would have occurred on 10 June 1981[58] arising from the sale by Chan to Kong SC, then it would be from that date that Poon’s cause of action against Kong SC had accrued.  However, by Peconic’s case, Kong SC could not have been a constructive trustee even if she had received Chan’s half share with knowledge of Poon’s interest.  Therefore, by operation of s7(2) of the Limitation, any action by Poon against Kong SC for recovery of his interest in the Property would have already expired by 10 June 1993 so that Poon’s title as against the latter would have been extinguished.  That was even before the vesting of the Property in the executor on 17 October 1994 and his subsequent assignment to P on 25 March 1995;

(d) since Poon’s cause of action against Kong SC, if any, would have already been time-barred, it is difficult to see how the former could have a cause of action against the executor who was Kong SC’s successor-in-title.  Still less can one see how Poon could have a cause of action against D in 2016 (which was when the SPA was signed);

(e) as a matter of authority, both the Judge in Yeung Kit Lam & Wong Sau Fun v Lau Yiu Shing and L Chan J in Rose Place Ltd v Jung Christopher Lam obviously took the same view, albeit obiter, that once the cause of action of a beneficiary under a resulting trust as against a purchaser was time-barred, the latter could then pass his title on to another person without that potential incumbrance.  That view has the support of case authorities like Fairweather’s case.  Insofar as there is any inconsistency between Yeung Kit Lam & Wong Sau Fun v Lau Yiu Shing and the 1997 decision which cannot be reconciled, I would prefer the former; and

(f) as a matter of policy, as submitted by Mr Yim, counsel for P, allowing Poon to have a new cause of action against the successors-in-title of the executor would produce an absurd and anomalous result in that it would give Poon a back-door way to attack the executor’s title or his ability to dispose of the Property in situation when Poon’s cause of action against the executor had long been time-barred.  This would produce an unjust result.  Moreover, the submission of Ms Ma, if correct, would very much reduce the value of the Limitation Ordinance and thus should be avoided: Town Planning Board v Society for the Protection of the Harbour Ltd.[59]

28.  Based on the above, I am of the view that any claim by Poon of his interest in the Property pursuant to a presumption of resulting trust as against either Kong SC or his successors-in-title arising from Poon’s payment of part of the deposit (if any) would have been time barred by mid-June 1993, as a result of which Poon’s title in the Property as against P or her successors-in-title would have been extinguished.  My conclusion differs from the decision of the Judge against P in 1997 mainly because of the development in the law brought about by the judgment of the Court of Final Appeal in Peconic’s case.  Therefore, if it is necessary to do so, I would rule in favour of P on the limitation issue.

Conclusion

29.  Based on the above, I give judgment for P and grant her the two declarations sought as follows:

  (1)   P has satisfactorily answered the requisition under consideration; and

  (2)   P has proved and can give good title to the Property.

30.  Now that the blot on title of the Property is cleared, I am given to understand that the parties would go on to complete the transaction. 

31.  As agreed by the parties, there is no order as to costs.