WONG CHOR KIU v. LAU WING LOK

HCMP 1401/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1401 OF 2010

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BETWEEN

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J U D G M E N T

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1.  This is a vendor and purchaser summons in relation to the property known as all that office space No. 7 on the 2^nd floor of Shun Hing Building, 319 Ferry Street, Kowloon (“the property”).

2.  By a provisional sale and purchase agreement dated 4 May 2010 entered into between the plaintiff as purchaser and the defendant as vendor, the defendant agreed to sell and the plaintiff agreed to purchase the property on the terms and conditions as set out therein.

3.  Pursuant to the said provisional sale and purchase agreement, a formal sale and purchase agreement dated 12 May 2010 was entered into between the plaintiff as purchaser and the defendant as vendor of the property on the terms and conditions as set out therein.

4.  The purchase price under the said provisional agreement and the said formal agreement was $1,050,000.

5.  Deposits and part payment in the total sum of $105,000 (“the deposits”) were paid by the plaintiff to the defendant under the said provisional agreement and the said formal agreement.  The balance of $945,000 was payable by the plaintiff to the defendant upon completion.  Completion was to take place on or before 15 July 2010.

6.  Requisitions as to title were raised by the plaintiff’s solicitors Messrs S. C. Chan & Co. (“SCC”) which requisitions were answered by the defendant’s solicitors Messrs Wong Fung & Co. (“WF”).  SCC did not consider that the requisitions were satisfactorily answered.  The plaintiff’s case is that the requisitions raised were not satisfactorily answered and that the defendant has failed in his duty to show and to give good title.

7.  The plaintiff refused to complete the purchase of the property on or before 15 July 2010.

8.  By letter dated 15 July 2010 from SCC to WF the defendant was informed that the plaintiff would not complete the purchase and asked for the return of the deposits paid to the defendant.

9.  By letter dated 16 July 2010 from WF to SCC the defendant gave notice that the plaintiff was in repudiatory breach of contract for failing to complete the purchase, that the defendant accepted the plaintiff’s repudiation of the contract and that the defendant was forfeiting the deposits.

10.  The plaintiff claims the declaratory relief, the return of the deposits and the orders as set out in the originating summons.

11.  The defendant denies that the plaintiff is entitled to the relief claimed and counterclaims for the relief set out at paragraph 37 of the affirmation of Chong Fu Chuen (“Chong”).

Background

12.  By a power of attorney dated 12 October 2009 (“the power of attorney”) Lai Yuxiong (賴玉雄) (“Lai”) appointed Lau Fat Fai (“the donee”) as his attorney to do the acts set out therein.

13.  Lai had purchased the property from Chan Wah Ying (“Chan”)  by a sale and purchase agreement dated 11 December 2009 whereby Chan as vendor agreed to sell the property to Lai as purchaser for $590,000 on the terms and conditions contained therein (“the December 2009 agreement”).  Completion was to be on or before 18 March 2010.

14.  The December 2009 agreement was signed by Chan as the vendor and by the donee as the attorney of Lai as the purchaser.

15.  Prior to completion the property was sold by Lai as confirmor to the defendant by a provisional agreement for sale and purchase dated 26 January 2010 for the price of $1,300,000 on the terms and conditions contained therein (“the January 2010 agreement”).  Completion was to be on or before 18 March 2010.

16.  By the assignment dated 18 March 2010 between Chan as the vendor, Lai as the confirmor and the defendant as the purchaser the property was assigned to the defendant on the terms and conditions as set out therein (“the assignment”).  The donee signed the assignment as the attorney of Lai.

The requisitions

17.  The relevant requisitions raised by SCC are contained in the letter from SCC to WF dated 14 May 2010 as requisition 3 namely

“We also could not accept the Power of Attorney dated 12^th October 2009 in favour of LAU FAT FAI. We need the original, not the certified copy because it relates to this property only. Furthermore the Power of Attorney does not empower LAU FAT FAI to give valid receipt for the sale of property. Clause 12 is not helpful. Clause 12 empower LAU to give receipt when the property is used as security. There is no provision for LAU to sell the property. Besides the Power of Attorney and the Agreement for Sale and Purchase of 11^th December 2009 contradict in the identity documents’ identification. It is a Power of Attorney of much problems.”

18.  Three matters of concern were raised by that letter:

(1)   The plaintiff wanted the original power of attorney rather than a certified copy of the same;

(2)   The plaintiff queried whether the donee could give a valid receipt for the sale of the property;

(3)   There was a contradiction in the identification documents in the power of attorney and the December 2009 agreement.

19.  As to (1), WF subsequently supplied the original power of attorney to SCC before completion.  There was no longer any concern as to this.

20.  As to (2), by letter dated 6 July 2010 WF referred SCC to clause 29 of the power of attorney as giving the donee the authority to receive and to give receipts for the monies received.

21.  As to (3), WF in their letter dated 6 July 2010 to SCC expressed the view that the December 2009 agreement did not affect title as the December 2009 agreement was merged in the subsequent assignment.

22.  Mr Yip, for the plaintiff, in his submissions accepted that (1) and (2) were satisfactorily answered.  Nothing further turns on (1) and (2).

23.  As to (3), it is the plaintiff’s case that the requisition raised was not satisfactorily answered.

24.  There was further correspondence from 7 July 2010 to 14 July 2010 between SCC and WF in respect of the identification documents referred to in the December 2009 agreement and the power of attorney.

25.  Lai was described in the power of attorney as “Holder of The People’s Republic of China Resident Identity Card No. 44................ and The People’s Republic of China Re-Entry Permit No. W12……”. The numbers of both identification documents of Lai are set out in full in the power of attorney.  However, as this is the personal data of Lai I do not think that it is appropriate to set it out here.  It is not necessary to do so.

26.  The same identification documents of Lai were also set out at the signature page besides the signature of Lai as the donor of the power of attorney.

27.  In the First Schedule of the December 2009 agreement the identification document given of Lai as the purchaser was “People’s Republic of China Identity Card No. W12......”.  The number in full is set out there and is the same number as the People’s Republic of China Re-Entry Permit No. W12...... set out in the power of attorney.

28.  By their letter dated 7 July 2010 SCC did not accept the answer to requisition no. 3.  They stated

“ …..However, we could not accept your answer to our requisition No. 3. On page one of the Power of Attorney LAI YUXIONG states and we quote “I intends (sic) to sell and purchase the real/landed property in the Hong Kong Special Administrative Region…….” It does not states “……a real/landed property……”.

LAI YUXIONG is specific about the property in question.  How could we know it concerns this property!  Besides the identification documents referred to in the Agreement for Sale and Purchase and the Power of Attorney are messed up. We could not accept the Power of Attorney.”

29.  In reply by their letter dated 7 July 2010 to SCC, WF stated

“3. With due respect, we disagree with your view herein. Without prejudice to our previous answer to this requisition, we reiterate the same and further say that there should be no dispute that :-

(a) at pages 1 and 9 of the Power of Attorney dated 12^th October 2009 (“the PA”), LAI YUXIONG was twice identified by The People’s Republic of China Re-Entry Permit No. W12......;

(b) the PA was expressly dated 12^th October 2009;

(c) the PA relates to the “real/landed property in Hong Kong” sold and purchased by LAI YUXIONG;

(d) the Property is a “real/landed property in Hong Kong”;

(e) the Agreement for Sale and Purchase Memorial No. 09122401820025 was expressly stated 11^th December 2009 (“the S&P Agreement”) which relates to the Property purchased by LAI YUXIONG thereunder;

(f) The S&P Agreement was merged with and superseded by the subsequent Assignment Memorial No. 10041601630085 which was dated 18^th March 2010 (“the Assignment”) and relates to the Property purchased and sold by LAI YUXIONG thereunder.

As the S&P Agreement and the Assignment were both dated after the date of the PA as aforesaid, there should be no reasonable doubt that the PA covers, concerns and relates to the S&P Agreement and the Assignment.

In respect of the discrepancies on the names of the identification documents referred to in the PA and the S&P Agreement respectively, we would like to draw your attention to paragraph 28 of Halsbury’s Laws of England Vol. 32 (4^th Edition) where it states that if there is a clerical error in a document which is an obvious mistake as to name, date etc., the Court will treat that as rectified. Hence, such discrepancies are obviously mistake as to the names of the identification documents which would not create any reasonable doubt on the identity of LAI YUXIONG and in particular, when LAI YUXIONG was identified by the same Re-Entry Permit No. “W12......” in the PA and the S&P Agreement respectively.”

30.  This did not satisfy SCC.  By their letter to WF dated 8 July 2010 SCC stated that

“ We don’t agree with you. The messing up of the identification documents could not be explained away by what you say in your letter under reference. Further the Power of Attorney refer to the real/landed property. Your must satisfy us that it covers this property in question…”

31.  Mr Yip submitted that there were two matters of concern.  The first was whether the power of attorney was an effective power of attorney authorizing the donee to purchase and sell the property and to sign the relevant documents as attorney for Lai.  The second was as to the identification documents of Lai.

The power of attorney

32.  The recital to the power of attorney states  

“     WHEREAS I intends to sell and purchase the real/landed property in the Hong Kong Special Administrative Region of The People’s Republic of China (“the Property(ies)”)

AND WHEREAS I am desirous of appointing an Attorney to do the following acts and things hereinafter appearing……”

33.  Lai appointed the donee to do the specific acts set out in the power of attorney.  These included authority

(a)   “To sign Provisional agreement(s), Agreement(s) for Sale and Purchase and any supplemental agreement(s) in relating to the sale and purchase of the Property(ies)” on my behalf…….” (clause 1);

(b)   “To complete the sale and purchase of the Property(ies) on my behalf under and by virtue of the relevant Provisional Agreement(s) and the relevant Agreement(s)……….” (clause 2);

(c)   “to manage the Property(ies) or any part or parts thereof in such manner as his Attorney shall think fit………..” (clause 3).

34.  They also included all the other matters set out in the power of attorney.

35.  Mr Yip submitted that by the use in the recital of the words “the real/landed property in the Hong Kong Special Administrative Region of The People’s Republic of China” the power of attorney should be construed to mean that Lai as the donor intended to sell and purchase only one specific property under the power of attorney.

36.  I am unable to accept Mr Yip’s submission.

37.  The power of attorney was not a general power of attorney under section 7 of the Powers of Attorney Ordinance Cap 31.  However, in my view, on a proper construction of the power of attorney it was not a power of attorney in respect of only one specific property.  It was, in my view, a general power of attorney at common law to authorize the donee to purchase and sell real property in Hong Kong.  The words “I intends to sell and purchase the real/landed property in ……………. (“the Property(ies)”) in the recital and the acts authorized as set out in the power of attorney are, in my view, clear.  On a proper construction of the power of attorney Lai clearly intended to and did appoint the donee as his attorney to purchase and to sell real property in Hong Kong and to do the acts set out therein.  It was a power of attorney to authorize the donee to purchase and sell either one or more than one real property in Hong Kong.  It seems to me that if Lai intended to refer to only one specific property it would be absurd to authorize the donee to do all the acts as set out in the power of attorney in respect of “the Property(ies)”.

38.  Mr Yip also referred to several clauses in the power of attorney where the word “Property” was used instead of “the Property (ies)”.  The use of the word “the Property” there were clearly clerical errors which do not affect the proper construction of the power of attorney as a whole.  The intention of the donor is, in my view, clear from the power of attorney.  It was to authorize the attorney to purchase and sell either one or more than one real property in Hong Kong and to do the acts as set out therein.

39.  In my view the requisition raised in respect of the power of attorney has been satisfactorily answered. 

The identification documents

40.  Mr Yip submitted that the requisition raised in respect of the identification documents of Lai was not satisfactorily answered and that good title was not shown.

41.  In the power of attorney Lai is described as the holder of the People’s Republic of China Re-Entry Permit No. W12...... in addition to being the holder of the People’s Republic of China Resident Identity Card No. 44..................

42.  In the December 2009 agreement Lai’s identification document is given as the People’s Republic of China Identity Card No. W12....... That number is the same as the number of Lai’s the People’s Republic of China Re-Entry Permit No. W12........

43.  In the assignment his identification document is given as the People’s Republic of China Re-Entry Permit No. W12........

44.  In all three documents Lai’s English name and his Chinese name are the same.

45.  In all three documents Lai’s address is given as Shop 32, Ground Floor, Metro City Phase 1, Tseung Kwan O, New Territories, Hong Kong.

46.  The December 2009 agreement and the assignment were signed by the same donee as the attorney of Lai.

47.  The only discrepancy is that in the December 2009 agreement the identification document with the no. W12...... is described as the People’s Republic of China Identity Card whereas the identification document with that very same number is described as the People’s Republic of China Re-Entry Permit in the power of attorney and in the assignment.

48.  Undoubtedly the December 2009 agreement was merged with the subsequent assignment.  

49.  In Summit Link Limited v Sunlink Group (Hong Kong) Company Limited, Deputy Judge Z. E. Li at paragraph 49 of his judgment said when dealing with clerical errors

“49. Miss Wong contended that the rectification, initialled by a solicitor, was not good enough. The problem was not just a clerical error. It went to the root of title. Of course, I cannot take the latter point seriously. As to the procedure for correcting clerical error, none is needed. Mr. Chan was well supported by Halsbury’s Laws of England (4^th Edition) Volume 32, Para. 34:-

“Similarly, if there is a manifest absurdity or clerical error in a document7 or an obvious mistake as to date, or as to name, the court will treat it as rectified, and where property is settled subject to a mortgage the amount of which is incorrectly stated in the settlement, the error being clearly proved as between parties to the settlement, the court may treat the settlement as if the correct amount has been stated in it without putting the parties to the formality of a suit to rectify the error.” (Emphasis added)

50.  It seems to me that in the December 2009 agreement the description of the identification document with the no. W12...... as the People’s Republic of China Identity Card instead of the People’s Republic of China Re-Entry Permit was a clerical error.

51.  I am satisfied that there cannot be any real doubt that Lai, with the same English and Chinese name and of the same address, is the same Lai mentioned in the documents.  Both the December 2009 agreement and the assignment were signed by the same donee as attorney for Lai.  The error was merely a clerical error.

52.  It seems to me that the requisition as to the identification documents was also satisfactorily answered.

53.  As Lord Russell of Killowen said in MEPC Ltd v Christian-Edwards and others [1981] AC 205 at page 220

“ 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.”

54.  It is also useful to bear in mind what Litton PJ (as he then was) said in Mexon Holdings Ltd v Silver Bay International Ltd [2000] 1 HKLRD 935 at page 942

“A good title does not mean a perfect title, free from every possible blemish. Whenever a question like this arises, it must be approached from the stand-point of a willing purchaser and a willing vendor, both possessed of reasonably robust commonsense, both intending to see the transaction through to completion in terms of their own bargain.”

55.  I am satisfied that the defendant has complied with his duty to show and to give a good title.

Conclusion

56.  The plaintiff’s claims as set out in the originating summons are dismissed.  The defendant is entitled to the relief counterclaimed.

57.  The plaintiff registered the originating summons as a lis pendens with the Land Registry.

58.  I give judgment to the defendant on its counterclaim as set out in the affirmation of Chong.  I grant the declarations as set out in paragraph 37 (b), (c), (e), (f), (g) and (h) of Chong’s affirmation.  I also make the order as sought in paragraph 37(j) of Chong’s affirmation and an order that the plaintiff do pay the defendant the sum of $10,500.  This is the amount of the estate agent’s fee payable by the defendant to the estate agent in respect of the sale of the property by the defendant to the plaintiff which amount is not disputed.

59.  Apart from the amount of $10,500 claimed, the counterclaim for damages was not pursued.

60.  I also make an order nisi that the plaintiff do pay the defendant its costs of these proceedings such costs to be taxed if not agreed.