WHOLE YEAR DEVELOPMENT LTD. V. LUNG CHIU YEE JULIA

1993, MP No. 966

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 Purchaser summons. The Plaintiff Purchaser's Solicitors raised a requisition on title in the following form :-

"3.	Assignment dated 19/3/1986 M/N. 3028481 (copy enclosed)

We note that the said Assignment was executed by Joshua Cheung Chik Yan, Deputy General Manager and Eric Tse Wang, Vice President of the Vendor, Financial and Investment Services For Asia Limited. It was stated in the extract of the Company record of the said Company that every instrument to which the seal was affixed should be signed by one person who should be a Director and counter-signed by another person who should be either the Secretary or Secretary-Treasurer or another Director or some other person appointed by the Directors for the purpose (copy of the Company extract is enclosed). Please therefore let us have an evidence that the said mode of execution was authorised by the Memorandum and Articles of Association of the said Company."

2. It would appear now to be common ground between the parties that the two signatories witnessing the affixing of the company seal on the Deed of Assignment were not Directors or Secretary of FISA at the relevant time.

3. Mr. C.H. Chan for the Plaintiff submitted that if Article 104 of the Articles of Association of FISA had not been complied with no Deed had been executed and accordingly there had been no transfer of the legal estate in the land to the Defendant.

4. Correspondence had been exchanged between the parties and without prejudice to their position the Defendant's Solicitors had attempted to regularise the matter.

5. Since the date of the Assignment FISA had gone into liquidation. As the liquidation appeared to have been completed an attempt was made to obtain the execution of the Registrar of Companies to a Confirmatory Assignment pursuant to Section 291B of Company Ordinance Cap. 32.

6. These efforts proved to be unavailing as it transpired that no dissolution of the liquidation had been formally ordered by the Court.

7. Mr. Edward Chan, Q.C. for the Defendants submitted that the requisition raised had been satisfactorily replied to.

8. There was no dispute that FISA had corporate power to execute the Assignment. Also there was no suggestion that the gentlemen who did in fact execute or fix their signatures to the Deed were not duly authorised Agents of the Company.

9. In such circumstances he relied upon Rolled Steel Products v. British Steel Corporation 1986 Ch. 246 for the proposition that at worst the Deed was voidable rather than void and that having regard to the correspondence which had been exchanged with the Registrar of Companies it was highly improbable that any attempt would be made by anyone to avoid the transaction.

10. He also placed reliance upon Lord Russell's test in MEPC v. Christian Edwards 1981 AC 205 :

"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."

11. I regret that I am unable to accept the validity of these submissions. I agree with Mr. C.H. Chan that Rolled Steel Products provides no assistance to the Defendant's contentions. It was dealing with an entirely different situation.

12. It did not purport to in any way rectify a situation such as arises in the present case where the requirements of Articles of Association of a Company for the due execution of a Deed had not been complied with. I agree with Mr. C.H. Chan that unless there has been such compliance there has been no conveyance of the legal estate. I do not consider that the MEPC test has any application to such a situation as the Defendant has no title to offer to the Plaintiff.

13. The Defendant seeks a Declaration in the following form :-

"(1) A Declaration that the requisitions in respect of the Defendant's title of and in the property known as All That one equal undivided 40th part or share of and in New Kowloon Inland Lot No. 4778 (No. 6A on the 3rd Floor and Car Parking Space No. 6 on Ground Floor on the Car-Port of Hamburg Villa, Nos. 8-10 Eastborne Road, Kowloon, Hong Kong ("the Property") have not been sufficiently answered by the Defendant or her solicitors as required under an Agreement for Sale and Purchase dated the 11th day of December 1992 made between Lung Chiu Yee Julia as the Vendor and Whole Year Development Limited as the Purchaser and registered in the Land Registry by Memorial No. 5525302 ("the Agreement")"

14. I am prepared to make a Declaration in this form. Mr. C.H. Chan did not pursue the other reliefs prayed for in the originating summons that so there is no need for me to make any comment upon them.

15. I will hear the parties on costs.