TANG HON LEUNG v. LUI MING

HCMP1220/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1220 OF 2010

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BETWEEN

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J U D G M E N T

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Introduction

1.  This is a vendor and purchaser summons which arises out of an agreement dated 10 May 2010 for the sale and purchase of a property in the New Territories.  By this originating summons, the plaintiff vendor seeks a declaration that he has sufficiently answered the defendant purchaser’s requisitions. 

2.  An impasse has been reached and, very sensibly, the parties have decided to have the matter resolved by the court.  This is a case of a willing vendor and purchaser.  If I grant the plaintiff his declaration, then the sale will be completed.  If I do not, it will not take place.  Whatever the outcome, the parties are agreed that there will be no order as to costs.

The Problem

3.  This case can be traced through the relevant conveyancing documents which are in the court bundle.  Page 26 is a memorial recording the succession to the property by the children of the deceased, Mr Tang Yung Yi.  This is dated 9 September 1948.  The property passed to his four children, one of whom, Tang Cheong Shing, was of full age.  He was then aged 27.  The other three were minors, aged 17, 13 and 10.  Their interest was held on trust for them by a lady called Tang Lam Shi, who presumably was their mother.  The following year, the property was sold and it is this sale which has resulted in the impasse between these parties.

4.  Page 28 is the conveyance on sale.  The conveyance is dated 19 July 1949, now over 61 years ago.  The property was sold to a Tang Kam Tong.  For the vendors, only Tang Cheong Shing signed.  The trustee for the three minor beneficial owners did not sign.  There is a reference to a page in the government records below Tang Cheong Shing’s signature which the plaintiff’s solicitors have not been able to locate.  All appropriate inquiries have been made but these have not been successful in finding this document.  Mr Yan, on the plaintiff’s behalf, submits that this must contain a reference to Tang Cheong Shing being authorised to sign the conveyance on behalf of the trustee for the three minor beneficial owners.  I will return to this aspect in a moment.

5.  The other signatory is the Assistant Lands Officer for the New Territories.  I will also need to return to the significance of his signature in a moment.

6.  Page 27 is the memorial, also dated 19 July 1949, recording the conveyance.  It also is signed by Tang Cheong Shing and the purchaser Tang Kam Tong.  The Assistant Lands Officer has also signed it.

7.  The only other document that I need to refer to is at page 30.  It records the conveyance of the property on 19 September 1980 from Tang Kam Tong to the plaintiff, Mr Tang Hon Leung.

8.  By letter dated 14 May 2010, the defendant’s solicitors raised two requisitions. The first related to the fact that the trustee had not signed the conveyance on behalf of the minor beneficial owners, and the other related to the written consent of the District Lands Officer for the sale to take place.  I can deal with the latter requisition briefly, and I do not believe that in any event this remains an issue between the parties.

9.  As Mr Yan rightly points out, there is and there was then no statutory requirement that the District Lands Officer had to give his consent to a sale of land in the New Territories.  The position in 1948 and 1949, which is the relevant time for these purposes, was that the conveyance and the memorial had to be signed by the Lands Officer, which is what occurred. 

10.  The plaintiff’s solicitors’ suggestion in response to the requisition that if consent was needed, then the Assistant District Lands Officer’s signature on the conveyance and the memorial would have stood as signifying consent is entirely compelling, but be that as it may, no such consent was required.

The Remaining Requisition

11.  The absence of the trustee’s signature is what divides the parties.  Mr Yan has three points.  Firstly, that looked at overall, including the reference to the missing record referred to under the signature of Tang Cheong Shing, the irresistible inference is that Tang Cheong Shing must have had the trustee’s authority to sign on behalf of the trustee and the minor beneficial owners otherwise the Assistant District Lands Officer would not have felt able to sign the conveyance and the memorial.  He would have needed to be satisfied that the conveyance was being validly done by all four beneficial owners.  If he was not satisfied, he would have required the trustee to sign before signing himself. It is this which impels Mr Yan to submit that the document referred to below Tang Cheong Shing’s signature on the conveyance and the memorial must be Tang Cheong Shing’s authority to sign on behalf of himself and the trustee.

12.  I am not able to say with certainty that Mr Yan is correct in what he says. Nevertheless, I am satisfied so that I am sure that there must have been a document available to the Assistant Lands Officer.  It might have been the page referred to under the signature, I put it no higher than that, which made it clear that Mr Tang Cheong Shing had the trustee’s authority. 

13.  There is no question in my mind that the Assistant Lands Officer, when faced with these three minor’s beneficial interests held on trust by a named trustee, would have required documentary proof that Tang Cheong Shing was signing with the authority of all four owners.  In the event, it is the Assistant Lands Officer’s signature on the conveyance and the memorial which leaves me in no doubt about these matters.

14.  That view of the evidence is sufficient for me to grant the plaintiff the declarations that he seeks.

15.  In addition, it seems to me that Mr Yan is also correct in pointing out that the passage of 61 years must lend force to the validity of the 1949 conveyance. One can reasonably have expected any one of the then minor beneficial owners to have mounted a challenge during this long period of time.  None of them has.

16.  Mr Yan’s next substantive point is that by now the beneficiaries’ claims would be long time-barred.  A minor beneficiary has 6 years to challenge a transaction such as this.

17.  Miss Chong, for the defendant, submits that because no limitation period exists in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy, or to recover from the trustee trust property or its proceeds in the possession of the trustee or previously received by the trustee and converted to his own use (see section 20(1)(a) and (b) of the Limitation Ordinance, Cap.347), it would still be open, if such conduct were to be proved against the trustee, for the beneficiaries to claim against the property as trust property or against the trustee or her estate, such an action would call the 1949 conveyance into question and raise the spectre of an invalid title.

18.  That submission by her is tied in with a Court of Appeal decision in Faithway Enterprise Limited v Lee Wan (unreported) CACV419/2006, which decided, following the case of Sun Shek Haw v Au So Kum [1993] 3 HKLRD 12, that a subsequent purchaser of the property who takes with constructive notice becomes a constructive trustee and as such section 20(1)(b) supra would apply to him.

19.  In Sun Shek Haw, Rogers JA (as he then was), was of the view that where there was a trust property and it had been transferred to the purchaser in breach of trust, he becomes a constructive trustee and that dishonesty is not necessary. Consequently, says Miss Chong, there remains the prospect of a challenge which is not caught by any limitation period.

20.  In respect of this, Mr Yan’s response is that Faithway supra is completely different on its facts.  In that case there was in existence a declaration of trust which did not confer on the trustee the power of sale.  Any subsequent purchaser was as a result put, at least on constructive if not actual notice, that a purported sale by the trustee was in breach of trust.  Similarly, in Sun Shek Haw, there was clear evidence that a transfer had been in breach of trust.

21.  I agree with Mr Yan that these two cases fall to be distinguished.  In this case there is also in existence the Assistant Lands Officer’s signature, from which very considerable comfort is to be derived, that the 1949 conveyance was as it should be in the sense that Tang Cheong  Shing had the authority of the trustee to enter into the conveyance on behalf of the other beneficial owners. Additionally, the passage of 61 years is not to be under-estimated.

Adverse Possession

22.  Finally, Mr Yan submits that his client has held this property as registered owner for 30 years.  He has held it as against the whole world.  This alone should be sufficient to extinguish a prospective “true owner’s” title.  In this regard, the decision of Barnett J in Wong Luen Chun & Anor v Secretary for Justice [1998] 4 HKC 122 is helpful.  The judge held that adverse possession could be acquired by someone who believed himself to be the true owner as well as those who knew that they were trespassing.  In this regard he adopted the English Court of Appeal’s decision in Hughes v Cork, 14 February 1994, unreported, and in particular the judgment of Saville LJ, as he then was (see 129F-H):

“The learned judge appears to have held that it is impossible for someone who believes himself to be the true owner to acquire title by adverse possession since such a person cannot ex hypothesi have an intention to exclude or oust the true owner. If this were the law, then only those who knew they were trespassing, that is to say doing something illegal, could acquire such a title, while those who did not realise that they were doing anything wrong would acquire no rights at all.

I can see no reason why as a matter of justice or common sense the former but not the latter should be able to acquire title in this way.

What the law requires is factual possession, that is an exclusive dealing with the land as an occupying owner might be expected to deal with it, together with a manifested intention to treat the land as belonging to the possessor to the exclusion of everyone else.  Obviously, if the possessor knows or believes someone else has the paper title to the land, he must intend to exclude that person along with everyone else, but in the absence of such knowledge or belief, it is, in my judgment, sufficient for this part of the second requirement simply to establish a manifest intention to exclude everyone.”

23.  It seems to me that all of these conditions would have been satisfied by the plaintiff over his 30 years of ownership of the property.

The Law

24.  The principle as to when and in what circumstances a good title is to be upheld is found in the decision of the House of Lords in M.E.P.C. Ltd v Christian-Edwards and Others [1981] page 205.  This is essentially a question of fact to be decided on the facts of the particular case before the court which will draw all proper and reasonable inferences that arise from the proven facts.

25.  The House of Lords decided that if the facts and circumstances of a case were so compelling that the court concluded beyond reasonable doubt that the purchaser would not be at risk of a successful assertion against him of the encumbrance, the court should declare in favour of a good title shown (see page 206 E-F).

26.  It strikes me that on the evidence before me, after all these years, that any concern as to good title by the defendant is illusory.  The risks, such as they are, are fanciful and fall to be discounted and, in any event, at worst the plaintiff, on my finding, will have an unanswerable claim based on adverse possession. 

27.  Nevertheless, the real answer that good title exists is to be found in the 1949 conveyance and the memorial itself.  Given the Assistant Lands Officer's signature on both, the irresistible inference must be that he was satisfied that Mr Tang Cheong Shing was authorised to sign on behalf of all the vendors so that the purchaser in 1949 took with good title, which he was able to pass on to the plaintiff in 1980.

28.  This being my view, the plaintiff is entitled to the declarations that he seeks in the originating summons, and with the parties' agreement, there will be an order of no order as to costs.