TAI SANG KUNG LTD. v. PARAKING LTD. AND ANOTHER

CACV 3131/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 3131 OF 2001

(ON APPEAL FROM HCA NO. 2503 OF 1998)

____________________

____________________

____________________

J U D G M E N T

____________________

Hon Rogers VP:

1. This is an appeal from a judgment of Chung J given on 25 August 2001. The action before the judge concerned a contract for the sale and purchase of Shop A, Ground Floor, 118 Sha Tsui Road, Tsuen Wan. In the action, the plaintiff sought recission of the agreement, a declaration that the 1st defendant had not sufficiently answered three requisitions, a declaration that the 1st defendant had not proved or shown good title to the property and a declaration that the 1st defendant had wrongfully repudiated the agreement. The action had been brought against the 1st defendant as the seller of the property and the 2nd defendant as agent. The 1st defendant counterclaimed for breach of the agreement. The judge dismissed the plaintiff's claim and gave judgment for the 1st defendant in the sum of $1,000.

2. By the time of trial the statement of claim had been re-amended. The issues raised in that document were extensive. The plaintiff's claim was in respect of a number of matters including misrepresentation, failure to disclose matters required to be disclosed and failure to answer requisitions. All those matters save for one have now been abandoned. This appeal was argued on points turning upon requisitions relating to a plan. At the conclusion of the hearing we said we would hand down our decision in writing, which we now do.

Background

3. The parties had signed a provisional sale and purchase agreement dated 27 October 1997. Subsequent to that, a formal sale and purchase agreement was signed between the plaintiff and the 1st defendant dated 14 November 1997. That agreement provided for completion of the sale of the property on 16 February 1998. By paragraph 5 thereof the 1st defendant as the vendor undertook to assign the property as beneficial owner and to give the relevant covenants for title implied under the Conveyancing and Property Ordinance, Cap. 219.

4. Importantly for the purposes of this case was clause 10(a) of the agreement which read:

"Any requisition or objection in respect of the title to the Property shall be delivered to the Vendor's solicitors within seven (7) business days after the receipt of the title deeds by the Purchaser's solicitors and any further requisition or objection arising upon and reply to a former requisition shall be delivered to the Vendor's solicitors within seven (7) business days from the delivery of such reply, otherwise the same shall be considered as waived and the Purchaser shall be deemed to have accepted the Vendor's title."

5. The re-amended statement of claim was drafted by counsel who appeared before us. As pointed out in the course of the hearing, it contained a large quantity of irrelevant and therefore strictly speaking embarrassing material. Instead of containing a statement in summary form of the material facts, it pleaded what at best would be regarded as evidence but more accurately, probably, peripheral material.

The requisitions

6. The requisition which is relevant to this case was one of a number of requisitions contained in a letter of 22 November 1997 from the plaintiff's solicitors to the 1st defendant's solicitors. It read:

"Please let us have the copy Survey Plan No. GP148-S for our perusal since the same may affect boundaries and area of Lot No. 2207 in D.D.449."

7. After a preliminary skirmish in which the 1st defendant's solicitors said that they found the requisition too vague, the 1st defendant's solicitors replied that the plaintiff was not entitled to the document requested. The correspondence proceeded until 23 January 1998. In that correspondence, the 1st defendant's solicitors denied that there was any duty to produce that document. In my view, they were wrong in this, the property particulars in the land search in respect of the shop in question had the following remarks:

"SURVEY PLAN NO. GP148-S MAY AFFECT BOUNDARIES AND AREA OF THIS LOT & IS AVAILABLE IN DISTRICT SURVEY OFFICE"

8. This was, therefore, a document which might have affected the land in question. As it emerged during the course of argument in this court, in fact, a copy of this plan was included as part of the Certified Copy Agreement and Conditions of New Grant No. 4445 enclosed with the letter from the 1st defendant's solicitors to the plaintiff's solicitors on 14 November 1997. That letter was a covering letter which was sent together with the executed sale and purchase agreement of that date and also the title deeds and documents which were provided.

9. Be that as it may, on 23 January 1998, the 1st defendant's solicitors sent by document exchange a copy of the plan. It is to be noted that that letter read:

"We refer to your letter dated 21st January 1998.

Entirely on a without prejudice basis, we wish to reply as follows :-

1. Please find enclosed another clear and legible copy of the Grant Plan No. GP148-S. Should it again be found illegible, you might well have a problem of human optometry rather than paper legibility."

Two matters might be observed from that. In the first place, the reference to another clear and legible copy would seem to be an indication that at least the 1st defendant's solicitors, and most likely both parties, were aware by that stage that the Grant Plan No. 148-S was part of the certified copy of the New Grant which had already been supplied. Furthermore, although the second sentence, in my view, is unnecessarily provocatively worded, it makes reference to the difficulty of reading the original plan. Certainly the copy of the plan in the copy of the New Grant at page 266 of the court bundle is not clear and difficult to read. It transpires furthermore that the letter of 21 January from the plaintiff's solicitors to which the letter of 23 January replied has most likely not been produced. The letter in the court bundle dated 21 January 1998 was, as the judge pointed out, most likely written on 27 January. That was the date on which it was despatched and it itself refers to the 1st defendant's solicitors' letter of 23 January 1998.

10. It was not until 11 February 1998 that the plaintiff's solicitors requested a certified copy of the plan. That was not only a mere five days before the completion day but was more than seven business days after the copy of the plan had been supplied by the letter of 23 January. Hence, in accordance with clause 10(a), to which I have already referred, any objection or requisition based on anything arising out of the plan was deemed to have been waived. The requisition, in my view, was too late. Although Mr Chong, on behalf of the plaintiff, tried to argue that the lateness had been waived by the correspondence that, in my view, was not so.

11. The other matter of requisition related to the fact that the copy of the plan supplied by letter of 23 January bore what was clearly a chop as follows:

A diagram is put in here

12. Although by letter which the judge held to have been dated 27 January 1998, the plaintiff's solicitors requested a copy of that letter, in my view, it is not shown that it is an item to which the plaintiff would be entitled. The land search referred to the survey plan possibly affecting the boundaries and area of the lot. It made no reference to this letter. The notation on the plan merely said that the plan had accompanied a letter. This, again, gave no indication that the letter in any way affected or was part of the plan. In my view, the plaintiff's claim in respect of the requisitions fails.

13. There is nothing further which arises on the subsidiary claim that the 1st defendant had failed to show or make good title. There was nothing to show that the boundaries or area were in any way affected by anything contained in the plan. Furthermore, it appears to me that the 1st defendant was in a position to show good title in respect of anything arising out of the plan.

Conclusion

14. In the circumstances this appeal falls to be dismissed. I would mention that the reasons may not accord entirely with the reasons given by Chung J for dismissing the plaintiff's claim in this respect. However, it has to be observed that the judge was unfortunately dealing with a plethora of points which had been raised both against the 1st defendant and its estate agent. As indicated, the other points have now been abandoned.

15. Unfortunately, this case was an example of one where unnecessary vituperative correspondence was exchanged between solicitors. It has been said on many occasions before that it is the conveyancers' duty to co-operate to try, if possible, to conclude a conveyancing transaction successfully. If the matter had been approached sensibly and proper consideration had been given in November 1997, the plaintiff's solicitors should, at most, have needed to ask whether the plan, which was contained as part of item 1 in the 1st defendant's solicitors' bundle of conveyancing documents sent on 14 November, was the same plan as was referred to in the land search. The 1st defendant's solicitors could have saved themselves a considerable amount of correspondence by giving thought to the matter themselves and, indeed, pointing out that the plan had already been provided as part of the certified copy of the New Grant.

16. In the circumstances, I would dismiss this appeal with an order nisi that the costs be in favour of the 1st defendant.

Hon Woo JA:

17. I agree with Rogers VP that this appeal should be dismissed with an order nisi for costs in favour of the 1st defendant for the reasons that he has given. I would, however, like to add the following.

18. The New Grant was dated 9 June 1965, but the Grant Plan No 148-S was stated on its face to be signed or issued by the District Land Surveyor on 3 January 1969. The reason why the plan was enclosed in and formed part of the New Grant which was dated earlier is apparent from clause 5(a) of the General Conditions of the New Grant which reads:

"5. (a) The boundaries of the lot shall be determined by the District Commissioner, New Territories (whose decision shall be final) before the issue of the Crown Lease. In the event of any excess or deficiency in area being found to exist as compared with the area specified in the Particulars of the lot the amount to be paid by or to be refunded to the grantee in respect of such excess of deficiency will be calculated at the rate of $52.- per square foot. Crown Rent will be adjusted to the nearest even dollars at the rate of $500.0 per acre per annum."

19. Apart from the reasons given by Rogers VP, I think I would dismiss the appeal for a further reason. Clause 25 of the sale and purchase agreement provides:

"25. Notwithstanding anything herein aforesaid, the parties hereby agree as follows:-

(a) The title to the Property shall commence with the Crown Lease and an Assignment/Mortgage extending not less than 15 years before the date hereof.

(b) The Vendor shall not be called upon nor be bound to produce or procure the production of any deeds, instruments or writings whatsoever not in the Vendor's custody or possession nor to produce certified or other copies of or extracts from such other deeds, instruments or writings, nor to give any information in respect thereof."

20. The New Grant and the relevant assignments having been provided to the plaintiff's solicitors by cover of the letter dated 14 November 1997 from the 1st defendant's solicitors, according to clause 25(b) referred to above, the 1st defendant should not have been called upon nor be bound to produce any other deeds, instruments or writings whatsoever not in the 1st defendant's custody or possession or any certified or other copies of the same. The requisition for the production of a certified copy of the plan and a copy of the letter dated 7 January 1969, the subject of this appeal, was therefore not justified.

21. In paragraph 14 of Rogers VP's judgment, he alludes to the fact that the reasons for dismissing this appeal may not accord with the reasons given by Chung J. Indeed, Chung J appears at paragraph 25 of his judgment to have rejected the requisition and the failure to prove good title in respect of the subject of the requisition on the basis that the plaintiff had failed to establish that the plan and the letter dated 7 January 1969 were title documents.

22. However, it is not clear if the reasons adopted by this court for dismissing this appeal were raised in the trial before Chung J. The statement of claim that is deprecated by Rogers VP in paragraph 5 above was originally in proper form, which mainly raised a claim against the 1st defendant based on misrepresentation. It consisted of 6 pages and was dated 24 March 1998. On 10 March 2000, the statement of claim was very substantially amended to raise failure to answer requisitions (including those in issue in this appeal) and failure to prove and show good title, and it was very slightly re-amended on 4 July 2001, the second and last day of the hearing before Chung J. The document had then become one with 40 pages. Despite the very substantial, verbose and embarrassing amendment to the statement of claim, there had been no amendment to the defence to respond or at all. The result is that these reasons were not specifically raised in the defence.

23. Moreover, there is no respondent's notice in this appeal relying on any of these reasons in support of the judge's conclusion. Indeed, the skeleton arguments of counsel for the 1st defendant only reached the court by facsimile after 5 pm of the day before the hearing by us, and counsel very properly informed us at the beginning of the hearing that he had not been properly instructed, for which he required a short adjournment (which was granted) in order to put things in order. This might have been the reason why no respondent's notice has ever been served.

24. Although the reasons have not been raised by a respondent's notice and it is unclear if they were raised before the judge, I am still of the view that the appeal should be dismissed because these reasons would obviously be available to the 1st defendant if a retrial be ordered and a retrial would only be otiose and a waste of time and costs.

Hon Yeung J:

25. For the reasons given by Rogers VP and Woo JA, I too would dismiss the appeal. I also make an order nisi that the plaintiff should bear the costs of the appeal.

Hon Rogers VP:

26. The appeal will accordingly be dismissed. There will be an order nisi for costs in favour of the 1st defendant.