LEUNG KWOK WA, JOHN and Another v. YAU WONG CHING and Another

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS
NO. 3686 OF 1995

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J U D G M E N T

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Leong, J.:

On 13.10.95 the Plaintiffs as Purchasers and the Defendants as Vendors entered into an Agreement for Sale and Purchase of the property at the G/F of the building on Section A of Lot No. 390 DD No. 224 in Sai Kung New Territories (the "Agreement"). Clause 10 of the "Agreement" requires the Defendants to show a good title to the property and under Clause 12 the Plaintiffs are entitled to raise requisitions or objections in respect of the title of the property. Completion was to take place on or before 16.11.95.

2. The root title of the lot came from an Agreement and Conditions of Exchange registered as New Grant No. 6044. This was granted to a Chu Loi on 19.1.77. By a Deed of Gift dated 6.1.77 Chu Loi assigned the land to 4 Donees: Chow Yin Fai, Chu Pak Yan, Chu Pak Hong and Chu Pak Wing. This Deed was registered by Memorial No. 89830 on 6.4.77 together with an Undertaking by the Donees dated the same date to fulfil the building covenants and the General and Special Conditions of the New Grant.

3. On 10.10.95, the solicitors for the Plaintiffs raised the following requisition:

"1. The Condition of Exchange/New Grant No. 6044 was dated 19th January, 1977 granted to Chu Loi. The said Chu Loi by a Deed of Gift Memorial No. 89830 assigned the granted land to 4 donees on 6th January, 1977. Since the land was granted to the said Chu Loi on 19th January 1977, by what right did the said Chu Loi assign the land to the donees?..."

4. On 8.11.95, the solicitors for the Defendants replied as follows:

"1. As the New Grant No. 6044 and Deed of Gift Memorial No. 89830 are prepared and registered by the District Officer, Sai Kung and Land Officer pursuant to an Undertaking Memorial No. 898311, the Government had consented the execution and registration of the Deed of Gift Memorial No. 89830, therefore, the Deed of Gift is deemed to be valid."

5. The Plaintiffs' solicitors were not satisfied with the answer given above, being of the view that there was no law that execution and registration of any title deed by the Government was deemed to be valid and they considered that the Defendants had failed to prove good title in respect of the Deed of Gift. They wrote to the Defendants' solicitors on 8.11.95 to this effect and on 13.11.95 gave 14.11.95 as the last day for the Defendants to prove good title or the Plaintiffs would determine the "Agreement".

6. The Defendants' solicitors replied on the same day reiterating their views that the requisition had been satisfactorily answered citing in support S. 11(2) of the New Territories Ordinance:

"Notwithstanding anything in this or any other enactment, the registration of any deed, will or other instrument, or any judgment, order or lis pendens, in respect of or affecting land shall be deemed to have been validly effected if effected at any place approved for such purpose by the Land Officer."

7. The Plaintiffs considered that did not answer their requisition since what was requisitioned was the right of Chu Loi in assigning the land to the 4 Donees.

8. The Defendants' solicitors by a further letter dated 15.11.95 explained that on the face of the documents, the Conditions of Exchange (New Grant 6044) was granted on or about 19.1.1977 and the Deed of Gift which was granted on 6.1.77 and registered on 6.4.77, expressly stated that what was granted to the Donees was "for the residue of the term of years created by the New Grant No. 6044 dated 19.1.1977". The Undertaking in respect of the lot was executed by the Donees on 6.4.1977 "in consideration of Government's consent to the execution and registration of a Deed of Gift of the lot (New Grant 6044) from Chu Loi to ..." the 4 Donees. The Defendants' solicitors stated in their letter that in those circumstances, the date in the Deed of Gift was not the date of delivery of the Deed which must have been delivered after the creation of New Grant 6044.

9. The Plaintiffs did not agree and held the view that the Deed of Gift was executed before the New Grant was created and rejected the Defendants' answers. They considered that the requisition had not been satisfactorily answered and determined the "Agreement".

10. The Plaintiffs issued the present proceedings seeking a declaration that the requisition has not been satisfactorily answered and that a good title has not been shown by the Defendants, together with an order that the deposit be returned to the Defendants and that the Plaintiffs be entitled to the costs of investigating the title of the property and costs.

11. The main contention of the Plaintiffs is that the Defendants had not shown good title beyond reasonable doubt in that they were not in a position to say that the property could be conveyed to the Plaintiffs without risk of litigation. The answers provided by the Defendants prior to determination of the "Agreement" had not satisfactorily answered the requisition. The thrust of their argument is that the date of the Deed of Gift was prior to the date of the New Grant and therefore Chu Loi did not have any proprietary interest in the property to pass on to the Donees.

12. Mr. Ng for the Plaintiffs submitted that the possibility of a mistake in putting the date should be excluded and the fact that particulars of the New Grant were mentioned in the Deed of Gift did not mean it was misdated. He submitted that possible negotiations prior to the grant and the proximity of the dates of the Deed and the New Grant showed that Chu Loi could have been aware that a grant was imminent and proceeded to make it a gift to the Donees on a date prior to the New Grant being made.

13. Mr. Ng further relied on the presumption of due execution under S. 23 of the Conveyancing and Property Ordinance which provides that an instrument appearing to be duly executed shall be presumed, until the contrary is proved, to have been duly executed. Mr. Ng submitted that it should be presumed that the Deed of Gift was duly executed on the date which appeared on it i.e. 6.1.1977.

14. Mr. Li for the Defendants submitted that he was aware that the burden to prove good title rested with the Vendors and it was a heavy burden. However, citing MEPC v. Christian-Edwards [1981] AC 205, Kan Wing-yau and Another v. Hong Kong Housing Society [1988] 2 HKLR 187 and other cases on the point of showing good title, he contended that there was ample evidence to show the date on the Deed of Gift was mistakenly put down as 6.1.77 instead of 6.4.77 which was after the date of the New Grant. The passage he cited was at page 220 where Lord Russell in his judgment, dealing with the case where the question whether a sufficiently good title has been shown depends on a conclusion or inference as to fact, had this to say:

"... 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."

15. Mr. Li submitted that if the Deed of Gift was made in point of time before the New Grant, it was impossible that reference to the New Grant could be made in the Deed of Gift. The registration of the Deed and of the Undertaking to fulfil the covenants in New Grant were on the same day and there was no evidence that Government disputed the interest of the Donees in the property when Government accepted the Undertaking. He further submitted that if the Donees had no interest, they would not have entered into the Undertaking. If Chu Loi had any interest in the property at all, there was no evidence that he had asserted any of his rights over the property in the last 19 years. That being the case, there was no risk of a successful assertion against the Plaintiffs.

16. In answer to the presumption of due execution, Mr. Li submitted that the presumption was rebuttable and extrinsic evidence could be admitted to show the actual date of execution. He relied on Xiamen International Finance Co. Ltd. (formerly known as Panin International Finance Corpn Ltd.) v. Tsui Tai-yan and Another [1987] HKLR 977 where at page 979 Godfrey, J. had this to say:

"The rule is that a deed takes effect from the date of its delivery, which in this case was 19th October 1982. Although it is to be presumed that the date appearing on the deed is the date of its delivery, the presumption is rebuttable: "as soon as the contrary appears, the apparent date is to be utterly disregarded" (see per Patterson, J. in Browne v. Burton (1847) 17 LJ QB 49, at p. 50)"

17. In the present case, the Deed of Gift expressly states that "Chu Loi .... as Donor hereby assigns ... unto Chow Yin Fat ... as Donees the Lot No. 390 ...". In the Schedule to the Deed, under "Particulars of Incumbrances", it is stated: "Subject to the General and Special Conditions contained in the Conditions of Exchange (New Grant No. 6044) dated 19.1.77". It would appear that at the time when the Deed of Gift was executed, Chu Loi as Donor was fully aware of the existence of the New Grant on 19.1.77. If that is so, the apparent date of execution 6.1.77 could not have been the actual date of execution. It was not possible for the Donor to know some two weeks before hand the exact date when Government would make the New Grant to him. Government would not have accepted the Undertaking from the Donees if it was apparent that the Donees had no interest in the land. If the Deed were made on 6.1.77, I see no reason why the Donees should have waited 3 months before its registration and why Government would have waited equally that long before the Donees were required to enter into the Undertaking. The only inference from the evidence is that the apparent date of 6.1.77 on the Deed is a misdate and it should be ignored. It is not disputed that the Donees since their Undertaking to Government have performed the covenants of the New Grant and built on the land. There is no evidence that either Government or Chu Loi had intervened or purported to assert any right over the land. The circumstances of the present case are so compelling that I can conclude beyond reasonable doubt that the Plaintiffs are not at risk of a successful challenge to their title. Accordingly, I declare the Defendants have shown good title to the property. The requisitions have been satisfactorily answered. The summons should be dismissed with costs to the Defendants.

(A. Leong)

Judge of the High Court