RE LEE MEI YAN KRIS

HCMP356/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 356 OF 2013

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REASONS FOR DECISION

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1. The applicant is the owner of Flat A3 on the Ground Floor, Nos.11A-11D Hart Avenue, Kowloon (“Property”). She acquired the Property from Au Yuk Kui, Tam Sui Yee and Poon Soon Kwong by way of an assignment dated 10 January 2013 for the consideration of HK$24 million.

2. In the assignment dated 10 January 2013, the Property is described as “ALL THOSE 11/20^th parts or shares of and in ALL THAT 1/14^th part or share of and in ALL THAT piece or parcel of ground registered in the Land Registry as KOWLOON INLAND LOT NO. 10449 And of and in the messuages erections and buildings thereon known at the date hereof as NOS.11A-11D HART AVENUE, KOWLOON (“the Building”) TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT A3 on the GROUND FLOOR of the Building which said Flat is shown and coloured Green and marked “A3” on the Ground Floor Plan annexed to the Sub-Deed of Mutual Covenant” (my emphasis).

3. By an agreement for sale and purchase dated 1 February 2013, the applicant as vendor agrees to sell and Solidmount Investment Limited as purchaser agrees to buy the Property for HK$26.8 million.  The initial deposit of HK$0.8 million and the further deposit of HK$1.8 million have been paid by the purchaser to the applicant.  The completion date is scheduled to be on or before 3 May 2013.

4. In the agreement for sale and purchase dated 1 February 2013, the Property is described as “ALL THAT 1/3^rd part or share of and in ALL THAT 1 equal undivided 14^th part or share of and in ALL THAT piece or parcel of ground registered in the Land Registry as KOWLOON INLAND LOT NO.10449 And of and in the messuages erections and buildings thereon known at the date hereof as “Nos.11A-11D Hart Avenue” (“the Building”) TOGETHER with the exclusive right to hold use occupy and enjoy ALL THAT FLAT A3 on the GROUND FLOOR of the Building” (my emphasis).

5. It is immediately obvious that the description of the Property in the assignment dated 10 January 2013 and in the agreement for sale and purchase dated 1 February 2013 is different.  Upon checking the title deeds of the Property, the applicant’s solicitors discovered anomalies in the description of the number of undivided shares in respect of the Property found in various title documents of the Property.  This led to the present ex parte originating summons in which the applicant seeks the following reliefs:

(a)   that the assignment dated 20 October 1982 and registered in the Land Registry by Memorial No.UB2340600 (“Subject Assignment”) be rectified by incorporating the amendments in the manner marked in red as per the draft amended assignment annexed to the originating summons;

(b)   that a declaration that the applicant’s interest in the Property shall be 1/3^rd part or share of and in 1/14^th part or share of and in Kowloon Inland Lot No.10499 (“Lot”) being the Property;

(c)    such other consequential directions or orders as the court shall think fit.

6. The draft amended assignment annexed to the originating summons seeks to amend the reference as to 11/20^th parts or shares of and in 1/14^th part or share of and in the Lot to 1/3^rd part or share of and in 1/14^th part or share of and in the Lot in respect of the description of the Property in the Subject Assignment.

7. At the hearing on 15 March 2013, I granted an order in terms of the reliefs sought in (a) and (b) of paragraph 5 above.  These are the reasons for my decision which I have reserved.

8. To properly consider the reliefs sought, it is necessary to first turn to the history of ownership in respect of the Property.

9. By an assignment dated 5 July 1977 and registered in the Land Registry by Memorial No.UB1425499, Flat A of Ground Floor, Nos.11A-11D Hart Avenue, Kowloon (being 1/14^th share of and in the Lot) (“Flat A”) was assigned by The Colonial Treasurer Incorporated to Lau Chung, Chiu Lai Mun and Pong Kwok Lap as tenants in common in equal shares.

10. By a Sub-Deed of Mutual Covenant dated 14 August 1980 amongst Lau Chung, Chiu Lai Mun and Pong Kwok Lap and registered in the Land Registry by Memorial No.UB1968327 (“Sub-DMC”), Flat A was partitioned in 3 portions known as Flat A1 (“Flat A1”), Flat A2 (“Flat A2”) and Flat A3 (“Flat A3” or the Property) respectively.

11. Under clause 4 of the Sub-DMC, Pong Kwok Lap was granted full and exclusive right and privilege to hold use occupy and enjoy the Property being Flat A3 to the exclusion of Lau Chung and Chiu Lai Mun.

12. By clause 7(c) of the Sub-DMC, Pong Kwok Lap covenanted and agreed with Lau Chung and Chiu Lai Mun inter alia (a) to perform and observe all the terms and conditions of the Government Lease reserved and contained and to pay 11/20^th shares of the due proportions of the Government Rent and the annual instalments of premium thereby reserved payable in respect of Flat A, and (b) to perform and observe all the terms and conditions in the Deed of Mutual Covenant and to pay 11/20^th shares of all payments contributions and outgoings payable thereunder in respect of Flat A.  The proportionate contributions of Government Rent, premium and other payments by Flat A1 and Flat A2 are 3/20^th shares and 6/20^th shares respectively.

13. However, the Sub-DMC fails to (a) apportion the 1/14^th part or share of and in the Lot in respect of Flat A amongst Flats A1, A2 and A3, or (b) change the number of undivided shares of and in the 1/14^th part or share of and in the Lot assigned to Lau Chung, Chiu Lai Mun and Pong Kwok Lap, so that each of them still held 1/3^rd part or share of and in the said 1/14^th part or share of and in the Lot even though they each has became entitled to the sole and exclusive right and privilege to hold use occupy and enjoy a designated portion of Flat A.

14. By the Subject Assignment, Pong Kwok Lap assigned the Property to Au Yuk Kui, Tam Siu Yee, Chan Kai Soo and Poon Soon Kwong.  In the Subject Assignment, the Property was described as All Those 11/20^th parts or shares of and in All That 1/14^th part or share of and in the Lot instead of 1/3^rd part or share of and in 1/14^th part or share of and in the Lot.

15. The applicant claims that similar mistakes appear in several subsequent title deeds in respect of the Property such as Probate Memorial No.0808501270013, Assent Memorial No.08080501270037 and the Assignment dated 10 January 2013 referred to above.

16. However, the title deeds in respect of Flats A1 and A2 subsequent to the Sub-DMC have correctly described the respective number of undivided shares, namely, 1/3^rd part or share of and in 1/14^th part or share of and in the Lot.  This is evident from, say, the assignment dated 19 September 2011 (registered by memorial no.11100400980017) in respect of Flat A1 by Lau Chung to Rich Aussie Limited, and the agreement for sale and purchase dated 30 July 2012 (registered by memorial no.12080301240078 and re-registered by memorial no.12091300510017) whereby Chiu Lai Mun agreed to sell and Macro Choice Limited agreed to purchase Flat A2.

17. Mr Leung, counsel for the applicant, submits (and I agree) from the above chronology of events that the common intention of Lau Chung, Chiu Lai Mun and Pong Kwok Lap at the time of the execution of the Sub-DMC was to allocate 1/3^rd part or share of and in 1/14^th part or share of the Lot to each of Flats A1, A2 and A3.

18. Against the above background facts, I also accept that the reference to 11/20^th parts or shares of and in 1/14^th part or share of and in the Lot in the Subject Assignment is the result of the then mutual mistake of Pong Kwok Lap and the assignees therein.  Since the Sub-DMC partitioned Flat A into 3 portions and only apportioned the payment contributions but not the undivided shares, each of Lau Chung, Chiu Lai Mun and Pong Kwok Lap necessarily held 1/3^rd part or share of and in Flat A.  By the Subject Assignment, Pong Kwok Lap assigned the whole of the Property to the assignees therein (and there is no evidence that he retained any part of the Property), so the reference to the assignment of “11/20^th parts or shares” of and in 1/14^th part or share of the Lot must be a common mistake, and the true intention was to assign 1/3^rd part or share of and in 1/14^th part or share of the Lot.  Further, as Mr Leung submits, what is now specified in the Subject Assignment (ie “11/20^th parts or share” of and in 1/14^th part or share of and in the Lot is more than what Pong Kwok Lap was properly entitled in respect of the Property (ie “1/3^rd part or share” of and in 1/14^th part or share of and in the Lot), hence the present application for rectification will not prejudice any other party.

19. Mr Leung has referred me to Swainland Builders Ltd v Freehold Properties Ltd [2002] EWCA Civ 50.  I agree that a party seeking rectification for a common mistake should show that (a) the parties had a common continuing intention in respect of a particular matter in the instrument to be rectified, (b) there was an outward expression of accord, (c) the intention continued at the time of the execution of the instrument sought to be rectified, and (d) by mistake the instrument did not reflect that common intention.  I am satisfied that the common mistake reflected in the Subject Assignment and the Applicant’s present application for rectification satisfy such requirements.

20. Under normal circumstances, the aforesaid common mistake in the description of the Property in the Subject Assignment could have been rectified by a deed of rectification to be executed by Pong Kwok Lap.  The applicant’s solicitors were unable to locate Pong Kwok Lap because his last known address as stated in the Subject Assignment, namely, No.3 Prat Avenue, 5^th Floor, Kowloon, Hong Kong, is no longer valid.  No.3 Prat Avenue, Kowloon, Hong Kong has been rebuilt into a new building in 1994.  The applicant’s solicitors also approached Messrs P C Woo & Co who acted for Pong Kwok Lap in respect of the Subject Assignment for assistance in locating Pong Kwok Lap.  They were not able to assist, and claimed that title to the Property had been accepted since the Subject Assignment.

21. In the circumstances, I consider it justified for the applicant to apply on ex parte basis to the court for the reliefs sought in the originating summons. For the above reasons, I granted an order in terms as set out in paragraph 7 above.