LAU CHUN LEUNG LOUIS AND ANOTHER v. YAN WAI WING AND ANOTHER

HCMP863/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.863 OF 1998

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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 Plaintiffs as the purchaser of the Property against the vendor Defendants. The property in question is 2nd floor and roof of DD.226, Lot No.221.

2. The formal Sale and Purchase Agreement was dated 26 September 1997. The scheduled completion date was 16 January 1998. Pursuant to the aforesaid agreement, the vendors' solicitors, by a letter dated 3 October 1997, sends the title deeds certified copies of the title deeds to the purchasers' solicitors.

3. By a letter dated 11 October 1997 (i.e. within seven working days upon receipt of the aforesaid title documents in accordance with the said Agreement), the purchasers' solicitors raised certain requisitions. In so far as relevant to the these proceedings, the purchasers' solicitors asked for the following documents for completing the chain of title, namely :-

a) Action No.138/1918 which was registered on 29 August 1918;

b) Action No.138/18 dated 17 December 1935;

c) Action No.70/1940 registered on 30 May 1940; and

d) Sale Memorial No.19466.

4. The request for the aforesaid four documents can be better understood by the following chart of registered owners and succession.

5. By a letter dated 19 November 1997, the vendors' solicitors replied to the aforesaid requisition as follows :-

"Items (a) to (d) are documents over 15 years old. Therefore, we are not obliged to produce the same to you by virtue of s.13 of the Conveyancing and Property Ordinance, Cap.219."

6. Both parties before me apparently accepted that this answer to the requisition is incorrect. Section 13 of Cap.219 provided that :-

"13. Proof of title and recitals

(1) Unless the contrary intention is expressed, a purchaser of land shall be entitled to require from the vendor, as proof of title to that land, only production of the Crown lease relating to the land sold and

(a) proof of title to that land

(i) where the grant of the Crown lease was less than 15 years before the contract of sale of that land, extending for the period since that grant; or

(ii) in any other case, extending not less than 15 years before the contract of sale of that land commencing with an assignment, a mortgage by assignment or a legal charge, each dealing with the whole estate and interest in that land; (Replaced 31 of 1988 s.6)"

7. However, nothing was heard from the purchasers' solicitors until a few days before the scheduled date of completion. On 7 January 1998, they wrote again after a lapse of 49 days as follows :-

"We refer to your letter dated 19th November 1997.

In respect of your reply, we shall have the following comments :-

1.(i) We disagree with your view. The first vesting Assignment was executed in early 1986. Your client therefore fails to show and prove good title by failing to produce title document in accordance with Section 13 of the Conveyancing and Property Ordinance. Your client is obliged to produce the Assignment Memorial No.19466 which forms part of the root of title and documents (a), (b) and (c) are relevant for proving the power of sale by the relevant parties."

8. On 10 January 1998, the vendors' solicitors enclosed a copy of the Sale Memorial No.19466, and undertook to supply to the purchasers certified copy thereof. However, in relation to documents (a) to (c), they insisted that those were pre-intermediate root documents of which they are not obliged to produce to them.

9. I would pause here and deal with Sale Memorial No.19466 right away as pointed out by the vendor's solicitors in their letter dated 16 January 1998 that :-

"In relation to Sale Memorial No.19466 which we have already undertaken to produce certified copy to you, the Memorial is acceptable as secondary evidence of the instrument. The same ought to be recognised as perfectly legitimate. 'A refusal to recognise it would destroy many, if not most, of the titles to land in the New Territories for no good reason.' : Kok Yun Kuen v Au Yeung Bik Tai (1991)." [1991] 2 HKC 522.

10. In the case of Kok Yun Kuen, Godfrey J. (as he then was) said :-

"... In particular, it must be said that, although the memorial of an instrument must not be confused with the instrument itself, the memorial may constitute secondary evidence of the fact that the instrument was made and (in so far as the contents of the memorial make it possible) secondary evidence of its contents. To get this far, you must get over the 'best evidence' rule; that is to say, you must show that there is some good reason for not producing the instrument itself, so as to justify your attempt to prove it by secondary evidence.

In Hong Kong, it has for a long time been the practice of solicitors acting for a vendor who cannot produce an instrument which proves a link in the chain of his title to offer the memorial of that instrument, not as the link itself, but as secondary evidence of it. And it has for an equally long time been the practice of solicitors acting for the purchaser to accept such evidence as sufficient and satisfactory. This practice of conveyancers here in Hong Kong ought to be recognized as perfectly legitimate and I so recognize it. A refusal to recognize it would destroy many, if not most, of the titles to land in the New Territories for no good reason. I am therefore prepared to hold without hesitation that, in the present case, the vendors, who have searched unsuccessfully for the original, have sufficiently proved, by the memorial No.114789, the transfer of 4 November 1946 by the Crown lessee to Tang Kan-yin (then aged 16 years) with himself as trustee."

11. Apparently, the purchasers' solicitors do not argue any more on the Sale Memorial No.19466 but they insisted in their second letter dated 16 January that the vendors have not provided the requested documents for proving title in accordance with s.13.

12. In respect of the title documents (a) to (c) (which is the main bone of contention between the parties before me), the vendors' solicitors wrote on 15 January 1998. They stated that they had attended the Sai Kung New Territories Land Registry with a view to locate documents (a) to (c). They were informed that they could not be traced in the Land Registry. However, according to the Land Register, there were entries made in relation to documents (a) to (c) and they enclosed a copy of the Land Register.

13. Mr Lin, Counsel for the Defendants Vendor relied heavily on No.34 of the New Territories Regulation Ordinance 1910. Section 20 of the aforesaid Ordinance empowered the Land Officer to decide questions relating to land summarily.

14. Section 23 thereof provided that every judgment or order of the Land Officer and every entry thereof in the Land Register shall be conclusive for all purposes, subject to any appeal in accordance with the proviso of the section.

15. Section 29 of the said Ordinance provided that in the event of the death of any person in whose name any land is registered, if no granted probate or administration of estate of the deceased is made by the Supreme Court within three months after such death, the Land Officer, on ascertaining the name of the person who is entitled to such land in succession to the deceased person, shall register the name of the successor, and appoint such registration being effected the said land shall vest in the successor for all the estate and interest of the deceased person therein, or for such estate and interest as shall be entered on the register by the Land Officer against the entry of the name of the successor.

16. Section 30 provided that a Land Officer shall have power to appoint trustees for minors and register the same in the Land Register. Upon registration the land shall vest in the registered trustee for all the estate and interest of the minor therein, and upon registration of the removal of any trustee the land shall divest from the trustee so removed.

17. Accordingly, I accept Mr Lin's submission that, as a matter of law, the Ordinance No.34 of 1910 clearly provided that the Land Register, recording the registration of the various parties under documents (a), (b) and (c), shall be proof of good title of the pre-intermediate roots of title of each of the persons stated therein. The answer to the requisition, of course, did not rely on the 1910 Ordinance. However, as submitted by Mr Lin, it is a matter of law which the purchasers' solicitors should be aware of. The situation is similar to the case of Lo Tai Yam v. Hu Mu Simon & Anor [1997] 3 HKC 23. In that case, Stone, J. said at p.34 :-

"In light of the facts and circumstances of the case before me I do not consider this plaintiff, or indeed any purchaser, to have been or to be at risk, and I dare say that had a vendor and purchaser summons been taken out (a procedure which was not adopted) a like conclusion would have emerged in rather shorter order. I have also specifically considered the response to the requisitions, and agree with Mr Mok that whilst they may not perhaps have been model responses, they were sufficient. Nor in this connection do I consider that the absence of specific reference to s13(4A) is a matter which should impact upon the result of this application; the Ordinance is there to be read, and in any event Mr Chow did not accept that it provided any answer given his primary contention (which I have rejected) that the transaction entered into pursuant to the power of attorney is void."

18. The situation is also similar to the case of Kan Chung Sun (Administrator of the Estate of Kan Fook Fu, Deceased) v. Chan Wah Chun [1995] 3 HKC 369. In this case, Yeung, J. said at pp.371 and 372 :-

" Mr Lee on behalf of the purchaser argued that the vesting order by which the deceased became the registered owner of the said premises did not fall within the definition of assignment under the Conveyancing and Property Ordinance and it could not form the intermediate root of title for the said premises. The suggestion was that in the absence of a copy of the vesting order itself, one could not be sure that the vesting order in fact dealt with the whole estate and interest in the said premises.

Assignment under the Conveyancing and Property Ordinance was defined under s2 as: '...(f) every other assurance or conveyance of land by any instrument; ...'. Section 20 of the New Territories Ordinance provided that: '... the Land Officer shall have power to decide in a summary way all questions and disputes in connection with, or in anywise arising out of, or regarding any land ...' and s23 clearly provided that 'every judgment or order of the Land Officer and every entry thereof in the land register shall be conclusive for all purpose'.

The deceased had been registered as the owner of the said premises by way of a vesting order in 1937. In my view, such registration in the land register clearly constituted an assignment in favour of the deceased and formed the intermediate root of title for the said premises.

I am also of the view that the suggestion, that despite the registration of the deceased as the legal owner of the said premises in the land register by way of the vesting order, somehow, the vesting order might not deal with the entire estate and interest and that someone with beneficial interest over the said premises might be hiding and appear to claim interest over the said premises was, far-fetched.

I cannot ignore that the vesting order in question was made in 1937 in favour of the deceased who died in 1953. If there was anyone who claimed to have any interest over the said premises, one would have expected him to wonder, from time to time, what was happening to the property in which he claimed to have such an interest. If he had taken the most basic steps to safeguard his alleged interest, he would have found out that the 'trustee' died in 1953 and he would have taken steps to assert his 'interest'. If he had done so, we would have heard about it if he had not secured his 'interest' in the said premises.

In my view, there was no conceivable probability for anyone to make any successful claim to be beneficially interested or otherwise in the said premises against the deceased.

In any event, a lapse of almost 60 years when the deceased had been registered as the owner of the said premises free from any alleged encumbrances clearly afforded a reasonable presumption that he had the whole estate and interest in the said premises.

On the facts of the case, the suggestion that the plaintiff did not have a good title to the said premises was illusory."

19. Lastly, I would also point out that the letter of the purchasers' solicitors dated 7 January 1998, after some 49 days of the reply of the Vendors' solicitors dated 19 November 1997, came far too late. All reasonable time must have elapsed after these 49 days. Consequently, the purchasers should be taken to have affirmed the contract and accepted a good title after this long delay since the letter of reply of the Vendors' solicitors on 19 November 1997.

Conclusion

20. Accordingly, the Plaintiffs' application for a declaration that the requisition has not adequately or sufficiently answered would be refused and dismissed. The application should be dismissed, the Defendant is entitled to their counterclaim as contained in para.14 (1), (2) and (3) of the affirmation of Defendants' solicitors, Mak Kwok Cheung of 19 May 1998 which was ordered to stand as the counterclaim of the Defendant. It has previously been ordered that the assessment of quantum of damages of the Defendants on the counterclaim, if any, would be adjourned to be heard before a Master, after the determination of this originating Summons.

21. There should also be an order nisi on costs for the Defendants against the Plaintiffs on the claim and the counterclaim.