WORLDPART INDUSTRIAL LTD v. TSO HO SAN

CACV 117/2005 & CACV 118/2005

CACV 117/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 117 OF 2005

(ON APPEAL FROM HCA NO. 9351 AND HCA NO. 9671 OF 1999 (CONSOLIDATED))

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HCA 9351/1999

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HCA 9671/1999

AND BETWEEN

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(Consolidated pursuant to the order of Master Lung dated 17^th February 2000)

AND

CACV 118/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 118 OF 2005

(ON APPEAL FROM HCA NO. 1192 OF 1999)

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BETWEEN

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R E A S O N S    F O R    J U D G M E N T

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Hon Rogers VP:

1.  I agree with the reasons for judgment given by Tang JA.

Hon Le Pichon JA:

2.  I agree with the judgment of Tang JA.

Hon Tang JA:

3.  The appeal concerns a development called the Regency Court in Fanling developed by the respondent (the developer).

4.  The appellants, Chu and Tso, were purchasers of various flats in Regency Court.  They have entered into five agreements (all in Chinese) which, for present purposes, can be regarded as identical.  Only two clauses are relevant, namely, the clause dealing with payment method and clause 9.

5.  The payment method clause provided for payment by instalments, the third of which (for 10% of the price) was “to be paid within ten days from the issuance of the occupation permit to the vendor.”

6.  Clause 9 provided that if no occupation permit was issued within 24 months from the date of the agreement, the purchaser would be entitled to cancel the agreement.

7.  No occupation permit was ever issued.  Nor would it ever be issued.

8.  Regency Court, despite its name, is made up of a number of small houses within the meaning of the Small House Policy in the New Territories.  That being the case, under Part III of the Buildings Ordinance (Application to the New Territories) Ordinance, Cap. 121, the Director of Lands can grant certificate of exemption exempting such small houses from the requirements of the Buildings Ordinance, Cap. 123.

9.  Certificates of Exemptions were duly granted in respect of the small houses covered by the appellants’ agreements.

10.  For such developments no occupation permit would be issued.  Instead certificates of compliance would be issued which would permit the small houses to be occupied.

11.  The respondent’s case is that the 3^rd instalment was payable within 10 days of the issuance of the certificate of compliance.  It is common ground that the appellants have failed to pay.  Moreover, the appellants have counterclaimed rescission of the agreements on the basis that no occupation permit was issued within 24 months of the relevant agreements.

12.  Suffiad J decided in favour of the respondent holding that:

“… the use of the words ‘occupation permit’ in those agreements, in order to give those agreements business efficacy, must be read to mean “that document to be issued by the government in order to allow for the lawful occupation of the relevant unit’.  In this case that would be the Certificate of Compliance.”

13.  Mr Kenneth C L Chan, who appeared for the appellants, but not below, submitted that “occupation permit” in the agreements referred to occupation permits issued by the Building Authority under the Buildings Ordinance.  He submitted that the Chinese expression in the agreements, “入伙紙” is commonly understood to refer to an occupation permit, although in the Buildings Ordinance, the Chinese equivalent for occupation permit is “入住許可證” (See section 21).  He has referred us to a glossary of terms published by the Lands Department which gave three Chinese expressions as being equivalent to occupation permit, “入伙紙”；“入住許可證”；“佔用許可證”.

14.  I am prepared to accept that colloquially, “入伙紙” is understood to refer to an occupation permit.  Indeed, that is its literal meaning.  I am also prepared to accept that when used in relation to a building governed by the Buildings Ordinance, it refers to an occupation permit issued under the Buildings Ordinance.  But that is not because the expression is a term of art, but because the only permit which would permit lawful occupation in respect of a building governed by the Buildings Ordinance is an occupation permit issued under the Buildings Ordinance.

15.  I do not believe, the expression occupation permit, when used in relation to a building not covered by the Buildings Ordinance, would refer to an occupation permit under the Buildings Ordinance.

16.  Here, the Regency Court is in truth no more than a collection of small houses, although a swimming pool, car parking and recreational facilities would also be provided.  That being the case, the judge’s conclusion, that the expression “occupation permit” referred to a permit which enabled a house in the Regency Court to be occupied, cannot be faulted.

17.  This is a straightforward matter of construction and does not depend on any implied term or whether the issuance of an occupation permit was a condition of the agreement.

18.  When the judge referred to “business efficacy” in the passage from his judgment which I have quoted above, he was saying in effect that the meaning he gave to the expression is the only sensible one.

19.  Mr Chan’s argument turned mostly on the understanding of the appellants based on what they said they had been told by agents of the respondent.

20.  This point is raised in para. 4 of the amended Notice of Appeal and the complaint appears to be that the judge has failed to consider the appellants’ evidence that they:

“ … were so told and they so intended that they were to buy units with occupation permits … ”

21.  So far as the subjective intention of the appellants are concerned, it is trite that evidence of subjective intention is inadmissible as an aid to construction.  Mr Chan has also referred us to the small print in the sales brochure.  But there was no reliance on them at the trial.  On the pleadings, it is clear that the only real issue was one of construction.

22.  Insofar as this ground of appeal relies on representation or misrepresentation, it has not been pleaded.  Nor properly investigated at trial.

23.  Indeed, Mr Alexander Wong, who appeared for the respondent, has drawn our attention to the objection taken by him at trial namely, that “there has been no plea of misrepresentations”.

24.  That is correct.  That is why the judge dealt with the matter as one of construction.

25.  Mr Chan also submitted that the respondents’ title was defective, namely, “that by selling of the units before permission was given and before approval was given, the transaction was in direct contravention of clause 4(d) of the respective Licences and thus Worldpart as the vendor, had failed to and could not prove good title to the units”.

26.  But as Yuen JA said in Chao San San and Anor v Worldpart Industrial Ltd (No.2), CACV 158/2002, unreported (25 May 2005) which was also concerned with units in Regency Court, in para. 10:

“At the time of an agreement for sale and purchase of property, the vendor does not need to have good title to the property.  The vendor’s obligation is to pass good title at the time of completion.”

27.  With respect, I agree.  So this submission also fails.

28.  For the above reasons, I agreed with the dismissal of the appeal with costs.