XIAMEN INTERNATIONAL FINANCE CO LTD v. TSUI TAI YAN AND ANOTHER

IN THE HIGH COURT OF HONG KONG

1987, No. M.P. 686

HEADNOTE

H.C.M.P. Action No. 686 of 1987

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: The Hon. Mr. Justice Godfrey in Chambers.

Date of Hearing: 8th May 1987.

Date of Delivery of Judgment: 8th May 1987.

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JUDGMENT

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1. This is a vendor and purchaser summons.  The plaintiff is the vendor and the defendants are the purchasers of Flat C, 5th Floor, Nos. 440-442 Nathan Road, Kowloon, Hong Kong (the property) at the price of HK $330,000.00, under a Sale and Purchase Agreement dated 25th August 1985.

2. The proceedings raise certain matters which, in my judgment, deserve general attention, and in these circumstances, I decided when the summons came before me for hearing on 8th May 1987 to make an order declaring (as I had concluded) that the vendor had shown a good title to the property but to take time to put my judgment into writing.  This is that judgment.  Although it is delivered in chambers, the parties have no objection to its release generally and I authorise its release accordingly.

3. The purchasers objected to the vendors title.  The essential facts may be shortly stated.  On 3rd November 1981 one Lam Nga, the owner of the property, appointed her son Yiu Tung as her attorney in relation to the property, with powers which included the power to execute and sign deeds and other instruments for her.  On 19th October 1982 the attorney executed on behalf of Lam Nga an assignment of the property in favour of one Lam Choi Lan.  This was mislaid for some time and, when presented for registration, was wrongly dated 13th September 1983.  So the assignment was made within one year of the date of the power of attorney although appearing on the face of it to have been made more than one year after that date.

4. These facts require a brief consideration of subsections (2) and (4) of Section 5 of the Powers of Attorney Ordinance, Cap. 31. Subsection (2) provides as follows :-

(2) Where a power of attorney has been revoked and a person, without knowledge of the revocation, deals with the donee of the power, the transaction between them shall, in favour of that person, be as valid as if the power had then been in existence.

Subsection 4 provides as follows :-

 (4) Where the interest of a purchaser depends on whether a transaction between the donee of a power of attorney and another person was valid by virtue of subsection (2), it shall be conclusively presumed in favour of the purchaser that that person did not at the material time know of the revocation of the power if -

 (a) the transaction between that person and the donee was completed within 12 months of the date on which the power came into operation; or

(b) that person makes a statutory declaration, before or within three months after the completion of the purchase, that he did not at the material time know of the revocation of the power.

5. In the present case, the evidence shows that the transaction was in fact completed within 12 months of the date on which the power came into operation.  Accordingly, no doubt arises on the title, whether the power of attorney had been revoked or not.  If it had not been revoked, there would be no room for any such doubt.  And even if it had been revoked, it is to be conclusively presumed in favour of the defendants that Lam Choi Lan did not know of the revocation, and so took a good title, i.e., one which put him in a position without the possibility of dispute or litigation to pass title to a purchaser: see In re Stirrups Contract [1961] 1 WLR 449, per Wilberforce J at p. 454.  The facts and circumstances of the case are to my mind so compelling that I can conclude beyond reasonable doubt that the purchasers will not be at risk of a successful challenge to their title (cp. MEPC v. Christian - Edwards [1979] 3 All ER 752, per Lord Russell of Killowen at P. 758a).

6. For these reasons, I will overrule the purchasers objection to the title and will declare that the vendor has shown a good title to the property.  The misdating of the assignment can be ignored.  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 LJQB 49, at p.50).

7. The widespread use of powers of attorney is a feature of the Hong Kong conveyancing scene.  This involves a lot of litigation; for a very large proportion of the matters brought before the Court by way of vendor and purchaser summons under Section 12 of the Conveyancing and Property Ordinance, Cap. 219 (which confers jurisdiction on the Court to decide on originating summons any question arising out of or connected with any contract for the sale or exchange of land) appears to be concerned with questions arising as the result of the creation of powers of attorney.  Where as here the question is a genuine one, that is to say, where a purchaser (whether or not a willing purchaser) takes an objection to the title and refuses to complete unless the Court declares the title to be a good one, the Court will, in properly constituted inter partes proceedings, decide upon the merits of the objection and will declare either that a good title has been shown, or that a good title has not been shown, to the property.  But is is important to observe and for the profession to realise (particularly since a belief to the contrary seems to be widely held) that the section does not confer on the Court a jurisdiction to cure defects in the vendors title.  The Court cannot, in collusive proceedings between vendor and purchaser, declare the vendors title to be a good title where it is not, even if that is what both vendor and purchaser would like the Court to do.  If then, for example, it appears from the evidence (as it often does) that the power of attorney has been lost and that no satisfactory evidence of its contents can be produced (see In re Airey [1897] I Ch. 167 and see also Section 13(1)(c) and (4) of the Conveyancing and Property Ordinance), or if for any reason the vendor is unable to claim the benefit of the provisions of Section 5(4) of the Powers of Attorney Ordinance, the Court may be obliged to declare that a good title has not been shown to the property.  This is unfortunate; for in many cases the title will, in practice, be a safe holding title, although not a good title (to which latter the purchaser is entitled).  In particular, where the transaction for the purposes of which the power of attorney was used was not completed within 12 months of the date on which the power came into operation, or where the purchaser taking under the instrument executed in reliance of the power of attorney has not made a statutory declaration, before or within 3 months after the completion of his purchase, that he did not at the material time know of the revocation of the power, any subsequent purchaser is always at risk in theory that his title to the property may be successfully challenged, on the ground that the power of attorney on which the title depends had been revoked, remote through the risk in practice may be.

8. A possible way out of this difficulty would be to amend Section 5 of the Powers of Attorney Ordinance so as to include a further conclusive presumption in favour of a purchaser in any case where the transaction effected in reliance on the power of attorney was effected more than, say, 15 years before the completion of his purchase (cp. Section 13(4) of the Conveyancing and Property Ordinance).  If this suggestion is thought worthy of consideration by the profession an early opportunity of introducing it into law may be provided during the passage of the Powers of Attorney (Amendment) Bill 1987, which has been, or is about to be, presented to the Legislative Council.

9. For my part, I must indicate that at present I would not be prepared to declare that a good title has been shown to property where the title depends on an execution by an attorney, unless the original power of attorney (or satisfactory conveyancing evidence of its contents) has been produced and the vendor can satisfy the requirements of section 5(4) of the existing ordinance.

10. In the present case, although I have dismissed the purchasers objection to the title, I am satisfied that it was an objection taken reasonably and in good faith and in these circumstances I will not make any order as to the costs of this application: compare In re Baker v. Selmons contract [1907] 1 Ch 238.

Representation:

Mr. Edward Chan instructed by Messrs. Ng, Lei, Lai & Chan for the Plaintiff.

Mr. Derek Cheung of Messrs. Cheung, Chan & Chung for the Defendants.