COVA ENTERPRISES LTD v. RUDDY TJANAKA

HCMP 368/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 368 OF 2003

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J U D G M E N T

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1. This is a vendor and purchaser's summons. These proceedings concern a property described as Apartment A on the 13th Floor of Block AB and Car Parking Space No. 50 of Pearl Gardens, 7 Conduit Road, Hong Kong ("the property").

2. The plaintiff is the purchaser of the property under a sub-sale agreement dated 9 December 2002 made between the plaintiff as purchaser and the defendant as vendor whereby the defendant sold the property to the plaintiff at the purchase price of HK$7,960,000 upon the terms and conditions of the sub-sale agreement ("the sub-sale agreement"). The defendant sold as confirmor. By the principal agreement dated four days earlier made on 5 December 2003 between the head vendor, Mr. Irwanto Oentung of Singapore ("the head vendor") and the defendant, the head vendor sold the property to the defendant at the purchase price of HK$5,500,000 ("the principal agreement"). Under both the principal agreement and the sub-sale agreement the date of completion was 20 December 2002.

3. It is plain that the defendant was selling the property to the plaintiff as confirmor under the sub-sale agreement (cl. 1 and Part III of the First Schedule). The two transactions were to be completed back to back with the date of completion of 20 December 2002. By agreement between the parties, the date of completion was extended to 6 January 2003. Prior to 6 January 2003 the plaintiff had paid the total sum of HK$796,000 as deposit and part of payment of the purchase price to the defendant's solicitors as stakeholders under the sub-sale agreement. The balance of HK$7,164,000 was payable on completion. Completion was to be by way of the usual solicitors' undertakings.

4. The transactions appeared to be progressing quite smoothly towards completion on 6 January 2003. By a letter dated 6 January 2003, the plaintiff's solicitors, Messrs Fan Wong & Tso ("FWT") sent the total sum of HK$7,164,000 to the defendant's solicitors by enclosing cheques in the said total sum as particularized in the letter addressed to the defendant's solicitors, Messrs Simon Ho & Co. ("SH").

5. Although the cheques were sent to SH on 6 January 2003, there was no completion. This was because FWT had received a copy of a letter also dated 6 January 2003 from Messrs Siao Wen & Leung ("SWL") addressed to Messrs Gary Mak, Dennis Wong & Chang ("GMDWC"), solicitors for the head vendor whereby SWL claimed an interest in the property on behalf of a Madam Tjandrawati Sutanta ("Sutanta"). SWL also enclosed a copy of a consent order made in Singapore dated 21 March 2001.

6. As a result of the notice of the adverse claim to the property, FWT, on behalf of the plaintiff, asked for the return of the cheques representing the balance of the purchase price. There is no dispute that completion did not take place. The plaintiff raised its concerns about the adverse claim of Sutanta to the defendant by its solicitors' letter namely, FWT's letter to SH dated 6 January 2003. SH replied to FWT by a letter dated 7 January 2003.

7. FWT also received a copy of a letter dated 6 January 2003 from GMDWC on behalf of the head vendor addressed to SWL. By a letter dated 7 January 2003 FWT expressed the view, inter alia, that the head vendor and the defendant were unable to prove good title and asked for the return of all the cheques and cashier orders tendered on 6 January 2003.

8. By a second letter dated 7 January 2003, FWT stated, inter alia, that as the defendant and the head vendor had failed to prove and to give good title to the property, such failure amounted to repudiation of the principal agreement and the sub-sale agreement which repudiation the plaintiff accepted. The plaintiff's case is that the principal and the sub-sale agreements were rescinded and FWT asked for the return of all sums paid under the sub-sale agreement.

9. There was further correspondence between FWT and SH. By a letter dated 17 January 2003, SH gave notice to FWT that unless the plaintiff completed the transaction by 20 January 2003 they would forfeit the deposit which had already been paid and would claim damages for the plaintiff's breach of the sub-sale agreement. By a letter dated 22 January 2003, SH informed FWT that as the plaintiff had failed to complete by 20 January 2003, the defendant was exercising his right under the sub-sale agreement to give formal notice that the sub-sale agreement was determined and that the deposits paid thereunder were forfeited.

10. The plaintiff's claims are for:

(1)	a declaration that the requisition and objection raised by the plaintiff by the letter from FWT dated 6 January 2003 in respect of the title to the property has not been answered or sufficiently answered by the defendant;
(2)	a declaration that good title to the property has not been shown in accordance with the terms of the sub-sale agreement;
(3)	a declaration that the plaintiff was entitled to rescind and did validly rescind the sub-sale agreement;
(4)	an order that the defendant do return to the plaintiff its deposits in the total sum of HK$796,000 together with interest thereon;
(5)	an order that the defendant do pay the plaintiff its wasted conveyancing costs and disbursement;
(6)	an order that the defendant do pay the plaintiff the costs of and incidental to this application;
(7)	a declaration that the plaintiff is entitled to an equitable lien on the defendant's interest in the property under the principal agreement for the deposits, interest thereon, the wasted conveyancing costs and disbursement and the costs of the application.

11. The defendant disputes the plaintiff's claim and has counterclaimed for wasted convenyancing costs in respect of the plaintiff's wrongful repudiation of the sub-sale agreement. The amount counterclaimed is HK$10,000.

12. I have been informed that the deposits in the total sum of HK$796,000 have already been paid into court in Miscellaneous Proceedings No. 349 of 2003. The said sum had been paid to the defendant's solicitors as stakeholder under the sub-sale agreement. There is no dispute between the parties that the wasted conveyancing costs on the part of the plaintiff was HK$38,000 nor is there any dispute that the wasted conveyancing costs on the part of the defendant was HK$10,000.

13. The plaintiff's concern arose out of SWL's letter addressed to GMDWC dated 6 January 2003 which was copied to, inter alia, FWT and SH. The said letter of SWL to GMDWC stated as follows :

“ Dear Sirs,

Re:	Apartment A on 13th Floor of Block AB and Car Parking Space No. 50, Pearl Gardens, No. 7 Conduit Road, Hong Kong ("the Property")

We act for Madam Tjandrawati Sutanta ("Sutanta").

We understand that you are the solicitors acting on behalf of [the head vendor] in disposing the Property.

Sutanta through us on 6th October 2001, wrote to Messrs. Vivien Chan & Co. for [the head vendor] and exercised her right under Clause 4 of the said Order hereinafter mentioned to purchase the Property from [the head vendor]. For details of this matter, please refer to Messrs. Vivien Chan & Co., your client's former solicitors. Up to the present moment, we are still awaiting the reply from Messrs. Vivien Chan about the amendments to the Sale and Purchase Agreement. Our client is always willing and ready to complete the purchase of the Property as per the terms set out in Clause 4 of the said Order.

We enclose herewith a Consent Order issued by the Court in Singapore dated the 21st day of March 2001 for your attention. Please note that pursuant to the terms of the said Order, [the head vendor] has to sell the Property to our client on the terms and conditions stated therein.

Your client's wrongful attempt to dispose of the Property is clearly a glaring breach of the said Order. In this connection, our client is considering to institute contempt proceedings against your client.

Further, our client has an equitable interest in the Property by virtue of the said Order. Any attempt to sell the Property without proper amount to our client's interest is wrongful and our client is also considering to take out an injunction to prohibit your client from wrongfully disposing the Property with a view to defeating her interest.

Meanwhile, please forthwith let us have all the information in relation to the said sale, including but not limited to the selling price, the date of completion and the amount of redemption of the mortgage.

All our client's rights are hereby reserved."

14. The enclosure to that letter was a copy of a consent order which was signed by, inter alia, the plaintiff in the Singapore proceedings, the head vendor and Sutanta ("the order"). The order appears to have been approved by Lai Siu Chiu J. on 21 March 2001. The enclosed copy order did not contain the title to the court proceedings in Singapore. It is plain from a reading of the order that the 1st defendant was the head vendor.

15. Ms Wong, for the plaintiff, rightly contended that the order provided for two different scenarios. Paras. 1 to 3 of the order dealt with the first scenario. By para. 1, the 1st and 2nd defendants in the Singapore action were ordered to pay the plaintiff and Sutanta the sum of S$1.2 million. Para. 2 provided for the manner of payment which included the sale of two properties, one being in Singapore described simply as "The Aspen Heights property" (para. 2.1) and the other, a property in Hong Kong described simply as "The Pearl Garden property" (para. 2.2).

16. Also by para. 2.2, the head vendor was to appoint Sutanta as his attorney with full power to proceed with the sale of "the Pearl Garden property" at the minimum price of HK$9 million or such other sum as the head vendor should authorize in writing. If the sale was not completed within six months from the date of the order then para. 4 of the order would operate.

17. Para. 4 provided that in the event that either "the Aspen Heights property" or "The Pearl Garden property" could not be sold pursuant to the provisions of para. 2, then paras. 1, 2 and 3 of the order would cease to operate. In substitution thereof, para. 4 of the order would take effect.

18. By para. 4.1 it was provided that the head vendor would sell the Pearl Garden property to Sutanta for the agreed price of HK$6 million. Both the head vendor and Sutanta agreed that they would proceed with the sale and purchase of the Pearl Garden property, the completion of which should take place within three months. By para. 4.2 the head vendor and the 2nd defendant to the action were to pay Sutanta the sum of HK$2.5 million of which HK$1 million would be paid within 14 days of the operation of para. 4. The remaining sum of HK$1.5 million would be paid in fifteen equal monthly instalments commencing on the date of the operation of para. 4.

19. It was also provided by para. 7 as follows :

“ At the request of [the head vendor], [Sutanta] shall furnish to [head vendor] a letter addressed to the discharging mortgagee of Aspen Heights that she is agreeable to a sale price of S$2.681 million to discharge the said mortgage within 8 months and also to furnish a similar letter to the discharging mortgagee of the Pearl Garden property that she is agreeable to a sale price of HK$6 m to discharge the said mortgage within 6 months."

20. It is to be observed that no further description is given of "the Pearl Garden property" in the order itself. However, there can be no doubt that the parties were referring to the property. There can also be no doubt that paras. 1, 2 and 3 of the order were not carried out, otherwise, the head vendor would not have been able to sell the property to the defendant, and the defendant would not have been able to sell the same as confirmor to the plaintiff. Para. 4 of the order, therefore, evidently came into effect.

21. Ms Wong drew my attention to the fact that Sutanta was not a stranger to the property. By an assignment dated 28 May 1974 the developer of Pearl Gardens, Mutual Faith Investment Ltd. assigned the property to Sutanta for the purchase price of HK$249,160. By an agreement for sale and purchase and an assignment both dated 27 May 1996 the property was sold and assigned by Sutanta to Monaco Developments Ltd., a BVI company, of which Sutanta was a director, at the purchase price of HK$8 million. Thereafter, by an agreement for sale and purchase dated 20 May 1998 the property was sold by Monaco Developments Ltd. to the head vendor at the purchase price of HK$16 million. The assignment to the head vendor was signed by Sutanta as director of Monaco Developments Ltd.

22. There is no dispute that by cl. 13 of the sub-sale agreement the defendant agreed to prove and to procure the head vendor to prove a good title to the property. Ms Wong reminded me of the applicable legal principles which have not been disputed. These can conveniently be summarized as follows :

(1)	the vendor has an obligation to prove good title. The obligation on the vendor to prove good title means that the title proved must be one which can at all times, and in all circumstances, be forced upon an unwilling purchaser in an action for specific performance.
(2)	The court will not force a doubtful title on a purchaser.
(3)	A doubtful title includes not only a title on which the court entertains a favourable opinion but may yet be reasonably and fairly questioned by other competent persons.
(4)	A purchaser will not therefore be forced to take a title which will expose him to risk or hazard. (See Kan Wing Yau and another v. Hong Kong Housing Society [1988] 2 HKLR 187 per Clough JA (as he then was) at page193)
(5)	As regards adverse claims, the purchaser is entitled to be satisfied beyond reasonable doubt that the vendor is seised of the estate which he is purporting to sell and that he is in a position, without the possibility of dispute or litigation, to pass that estate to the purchaser. (In re Stirrup's Contract [1961] 1 WLR 449 per Wilberforce J. (as he then was) at page 454)
(6)	Where the "incumbrance" in issue is an assertion of an adverse claim to the property by a third party, the purchaser (and the court) must be satisfied beyond reasonable doubt that the purchaser will not be at risk of a successful assertion against him of the incumbrance. (MEPC Ltd. v. Christian Edwards [1981] AC 205 per Lord Russell at page 220)
(7)	A blot on title can only be ignored if it is purely theoretical and not practical.

23. As regards requisitions, it has been held that there is an obligation on the vendor to answer requisitions and objections, that is to say, to bring forward facts and circumstances known to him which might be material to the title which he has contracted to pass to the purchaser on completion (Active Keen Industries Ltd. v. Fok Chi-keong [1994] 1 HKLR 396). And Litton JA (as he then was) said at page 407 :

“ But the vendor's solicitor must act with total candour, so that the purchaser can be reasonably certain that there are no facts and material relevant to the requisition known to the vendor which have not been disclosed."

24. As regards the vendor's duty to answer requisitions, it was also said by Deputy Judge Chu (as she then was) in Guang Zhou Real Estate Development (HK) Co. Ltd. & Another v. Summit Elegance Ltd. [2000] HKLRD 855 at page 864 :

“ What is required is that the requisitions should be answered in a straightforward manner and with candour, so that the purchaser can be reasonably confident that all the relevant facts are revealed and be able to decide whether the vendor has a good title. The parties' solicitors are not expected to act as advocates and to "bandy propositions of law". Ultimately, it is for the parties to decide for themselves what the legal position is, based on the facts and circumstances made known to them."

25. It was the plaintiff's contention that the defendant failed to prove good title by the time of completion on 6 January 2003. The requisition raised by FWT was contained in their letter dated 6 January 2003 addressed to SH which stated as follows :

“ Dear Sirs,

Re:	Apartment A on 13th Floor of Block AB and Carparking Space No. 50 Pearl Gardens, No. 7 Conduit Road, Hong Kong (the "Property")

We refer to the Property and our earlier facsimile to you and [GMDWC], solicitors for the Head Vendor of the Property, in relation to the letter of even date from [SWL] acting for [Sutanta].

The contents of the said letter from Sutanta's solicitors are most alarming. The said letter specifically claims that Sutanta has an equitable interest in the Property by virtue of the court order mentioned therein. It further indicates that Sutanta has in fact already exercised her right to purchase the Property, and the parties (namely Sutanta and the Head Vendor) had as recently as October 2001 been in the process of approving and completing an agreement for sale and purchase for the Property.

In view of the matters disclosed by Sutanta's solicitors and the claims and demands made in their said letter, the Head Vendor is clearly in breach of Clause 27 of the Principal Agreement for Sale and Purchase dated 5 December 2002 herein, in that there exists third party right and interest against the Property. Further, the Head Vendor's ability to give good title to the Property is cast into serious doubt, given that he has been ordered by court to sell the same to Sutanta only.

In the circumstances, we write to remind your client that he is obliged, pursuant to Clause 36 of the Agreement for Sub-sale sand Purchase between our respective clients, to take all necessary steps and actions to procure the due performance by the Head Vendor of the Principal Agreement.

Pending satisfactory resolution of Sutanta's alleged claims against the Property, we further reiterate that you should not release the deposits and the balance of purchase price to your client and/or [GMDWC] for the Head Vendor, or deal with the funds in any other manner without our prior approval.

Meanwhile, we are instructed to emphasise that our client is always ready, willing and able to complete the purchase of the Property in accordance with the Sub-sale Agreement herein, provided that the alleged third party claim is fully resolved and the Head Vendor and your client are able to give good and unencumbered title to the Property. Thus, in no circumstances shall our client be taken to be in default of the Sub-sale Agreement in any way whatsoever.

We look forward to your urgent reply to the above. All of our client's rights are hereby expressly reserved."

26. The letter dated 6 January 2003 from GMDWC to SWL which was copied to FWT and SH stated as follows :

“ Dear Sirs,

Re:	Apartment A on the 13th Floor of Block AB and Car Parking Space No. 50 of Pearl Gardens, No. 7 Conduit Road, Hong Kong ("the Property")

We refer to your letter of today's date.

While we are taking full instructions on your allegations, without admitting the validity and effectiveness of the alleged Court Order as against the captioned Property, we are surprised to note that notwithstanding that the alleged Order was dated the 21st March, 2001, it has never been registered in the Land Registry up to date to ensure that proper notice be given to those dealing with the Property. Indeed, we trust you would appreciate that in the absence of such registration the purchaser under the Agreement for Sale and Purchase dated the 5th day of December 2002 is entitled in law as bona fide purchaser to compel our client to complete the sale, and such purchaser will take a good title notwithstanding the notices you have just given to the solicitors for the relevant parties including ourselves.

Indeed, we have further been informed by our client just now that his Singapore lawyers have advised him that the said Order does not bind the Property, and in any event cannot be binding now as it has lapsed.

Meanwhile, we further noted that the copy Order you sent us does not contain any proper reference to the subject Property, but only refer to a "Pearl Garden Property"."

27. In answer to the plaintiff's requisition, SH replied to FWT by a letter dated 7 January 2003 as follows :

“ Dear Sirs,

Re:	Apartment A on 13th Floor of Block AB and Carparking Space No. 50 p\Perarl Gardens, No. 7 Conduit Road, Hong Kong ("the property")

We refer to your letter dated 6th January 2003.

We also refer to the letter by [SWL] dated 6th January 2003 with the enclosed copy Order allegedly granted by the Court in Singapore.

Putting aside the issue of authenticity of the said order as no sealed copy thereof has been severed (sic) upon us, we are of the opinion that such an order granted by a foreign country shall not be binding upon us unless it has been duly registered in the Hong Kong Court. May you refer to Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap. 319).

Without prejudice to the aforesaid, we do not share the view with you that [Sutanta] has any equitable interest in the said property. What the order intending to deal with is the proceeds of sale which is sole business of the Vendor hereof. As such, the liability and obligation arisen from the said Court order is only the personal liability of the Vendor and nothing to do with the title of property nor does it affect the interest of both our and your clients.

In any event, before we have received the said letter from [SWL], we have delivered the balance of purchase price to the Vendor's solicitors and, please correct us if not, so did your goodselves. In such circumstances, both our respective clients are bona fide purchasers without notice any such alleged claims and our respective clients' right should not be prejudiced.

Therefore, we stress that our client has not been in breach of the Agreement of Sub-sale and Purchase or at all and the transaction of the sale and purchase would be completed as scheduled.

All our client's right and interest are hereby reserved."

28. SH did not mention the effect of the non-registration of the order under the Land Registration Ordinance in their letter. SH raised the question of the authenticity of the court order. They also expressed the opinion that the order was not binding unless it had been duly registered in the Hong Kong court. They did not, however, expressly assert that the order was not registered under the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap. 139. They also expressed the view that Sutanta did not have an equitable interest in the said property as the order intended to deal with the proceeds of sale and had nothing to do with the title to the property.

29. The points raised by SH were misconceived. As Ms Wong rightly pointed out, the order made in Singapore proceedings was not enforceable by registration in Hong Kong. One of the conditions for registration under s. 3(2) of the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap. 319 of a judgment of a superior court of a foreign country is if there is payable thereunder a sum of money, not being a sum payable in respect of taxes or other charges of a like nature in respect of a fine or other penalty. Para. 4 of the order is not a judgment for the payment of a sum of money. The order was, therefore, not registrable under the said Ordinance.

30. It is to be observed that under the Foreign Judgments (Reciprocal Enforcement) Ordinance, even if the order had been registered it was liable to be set aside because the courts of Singapore are deemed not to have jurisdiction over immovable property outside Singapore (ss. 6(1) and 6(3)(a)).

31. The above propositions were not disputed by Mr. Cheung. The points taken by SH in their letter in answering the requisitions were, in my view, misconceived. It was also misconceived to suggest that the effect of para. 4 of the order was to deal with the proceeds of sale and had nothing to do with the title of the property. Para. 4 of the order clearly dealt with the sale of the property.

32. Mr. Cheung submitted that in the light of GMDWC's letter on behalf of the head vendor dated 6 January 2003, good title has been shown. He submitted that the said letter was part and parcel of the package of answers to the requisition raised and that the said letter of GMDWC was a complete answer. He submitted that title had been proved.

33. Mr. Cheung contended, rightly in my view, that by s. 2 of the Land Registration Ordinance, Cap. 128, only judgments or orders of the Court of First Instance, the District Court, and the Lands Tribunal by which judgments or orders any parcels of grounds, tenements or premises in Hong Kong may be affected can be registered. The order, however, was not such a judgment or order. It was a foreign order and was, therefore, not registrable as a judgment or an order under the Land Registration Ordinance. It was, however, his submission that the order also embodied a contract of sale of property in Hong Kong and as such it was registrable under s. 2(1) of the Land Registration Ordinance. The effect of non-registration of a registrable document is that it shall as against any subsequent bona fide purchaser for value be absolutely null and void to all intents and purposes (s. 3(2)). It was submitted that as the order was not registered as a contract of sale under the Land Registration Ordinance, any adverse claim of Sutanta was null and void as against the plaintiff. S. 4 provides that :

“ No notice whatsoever, either actual or constructive, of any prior unregistered deed, conveyance, or other instrument in writing, or judgment, shall affect the priority of any such instrument as aforesaid as is duly registered."

34. I am unable to accept Mr. Cheung's submissions. As Ms Wong submitted, the parties in the Singapore proceedings chose to embody their terms of agreement to the disposal of the litigation in Singapore by means of a court order, albeit by consent. It cannot be ignored that it was in fact a court order. As a foreign court order, it plainly was not registrable under s. 2. I accept Ms Wong's submissions.

35. There is also another reason why the order as such could not have been registered against the property. It is clear from the order that the only description of the property was "The Pearl Garden property". No other description is given in the order. It is plain that it could not have been registered against the property. There is no detailed description of the property in the order. The only description given is "The Pearl Garden property". That is clearly insufficient for the purpose of registration. The memorial to be delivered to the Land Registry has to contain, inter alia, a description of the land and premises affected or intended to be affected, including the lot number and address (Regulation 6(1)(a) of the Land Registration Regulations). It is impossible to discern the address of the property from the order itself and the order as such would have been rejected if submitted for registration against the property.

36. It was further emphasized by Ms Wong that the Land Registration Ordinance does not deal with interests in land not created in writing such as, e.g. a beneficial interest under an implied trust. If the equitable interest was unregistrable under the Land Registration Ordinance, the equitable interest would not be absolutely null and void against the plaintiff. Had the plaintiff completed the sale with notice of the adverse claim there is the possibility that the plaintiff would have rendered themselves vulnerable to a potential claim (Lam Sau Wah v. Tam Chi Hung [2001] 2 HKLR 104).

37. Ms Wong submitted that it was not clear whether the order was enforceable by action at common law in Hong Kong. It was not clear if the order was one in personam or in rem. A judgment in rem is a judgment whereunder either possession or property in a thing is adjudged to a person or the sale of a thing is decreed in satisfaction of a claim against the thing itself. If it was an order in rem the court of a foreign country has no jurisdiction to adjudicate upon the title to, or the right to possession of an immovable property situate outside that country (Rule 40(2), para. 14R-099 and 14-100 Dicey and Morris, The Conflict of Laws, 13th Edn.).

38. Ms Wong also drew my attention to s. 5 of the Foreign Judgments (Restriction on Recognition and Enforcement) Ordinance, Cap. 46 which provides that :

"No proceedings may be brought by a person in Hong Kong on a cause of action in respect of which a judgment has been given in his favour in proceedings between the same parties, or their privies, in a court of an overseas country, unless that judgment is not enforceable or entitled to recognition in Hong Kong."

39. S. 5 of Cap. 46 displaces a part of the rule of the common law that a foreign judgment does not extinguish the original cause of action in respect of which the judgment is given (para. 14R-018, Rule 35(3) and para 14-034 Dicey & Morris). Thus, if the order is not enforceable or recognised in Hong Kong, proceedings may be brought in Hong Kong for the same cause of action giving rise to the order in proceedings between the same parties and privies so that the usual doctrine of merger does not apply. That being so, in the absence of any information from SH or GMDWC about the Singapore proceedings there was a possibility that a claim against the property was made in the Singapore proceedings which claim could be relitigated in Hong Kong.

40. I accept Ms Wong's submissions. The complaint of the plaintiff is that it has not been given any substantive information about the claim of Sutanta to the property in any answer to the requisition raised. I am satisfied that the answer given by the head vendor's solicitors is not a complete answer at all as suggested by Mr. Cheung. The answer given by SH was also not straightforward. Points were taken which were misconceived. No information whatsoever was given about the claim of Sutanta in the Singapore action. The order refers to the property simply as "The Pearl Garden property". It can reasonably be inferred that the full description of the property must have been given in some court document prior to the making of the order. There might well have been a claim by Sutanta to the property in the Singapore proceedings as the property described as "The Pearl Garden property" was mentioned in the order.

41. There was no information whatsoever given about the Singapore proceedings or the cause of action in the proceedings underlying the order. The answer to the requisition was not satisfactory. I do not see how the plaintiff could be confident by the said letters from SH and GMDWC that all the relevant facts have been revealed to enable it or its solicitors to decide whether the vendor has a good title. It seems to me that the defendant has failed to prove good title by the time of completion on 6 January 2003.

42. In my judgment the defendant has failed to prove good title by the time of completion on 6 January 2003 and the plaintiff was entitled to rescind the contract under the sub-sale agreement. By cl. 19 of the sub-sale agreement all moneys paid by the plaintiff to the defendant should be returned to the plaintiff. The plaintiff is in my judgment entitled to the return of the deposits paid with interest.

43. I give judgment to the plaintiff. I grant :

(1)	a declaration that the requisition and objection raised by the plaintiff by the letter from FWT dated 6 January 2003 in respect of the title to the property has not been sufficiently answered by the defendant;
(2)	a declaration that good title to the property has not been shown in accordance with the terms of the sub-sale agreement;
(3)	a declaration that the plaintiff was entitled to rescind and did validly rescind the sub-sale agreement;

44. I also make an order that the defendant do return to the plaintiff its deposits in the total sum of HK$796,000 together with interest thereon. The said sum of HK$796,000 has already been paid into court in Miscellaneous Proceedings No. 349 of 2003. I have not heard arguments on the rate of interest and the period for which interest should be paid by the defendant. The parties' legal representatives should be able to agree this. I shall, however, give liberty to the plaintiff to apply on the question of the rate of interest and the period for which interest should be paid by the defendant if agreement cannot be reached as to this.

45. I also make an order that the defendant do pay the plaintiff its wasted conveyancing costs and disbursement in the sum of HK$38,000.

46. I make an order nisi that the defendant do pay the plaintiff the costs of and incidental to this application. I also grant a declaration that the plaintiff is entitled to an equitable lien on the defendant's interest in the property under the principal agreement for the said deposits, interest thereon, the said wasted conveyancing costs and disbursement in the sum of HK$38,000 and the costs of the application.

47. The counterclaim is dismissed. I also make an order nisi that the defendant do pay the plaintiff the costs of the counterclaim.