LAU KAM SHING AND OTHERS v. CHEUNG CHUEN HON

HCMP 504/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 504 OF 2011

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J U D G M E N T

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1.  This Originating Summons has been brought by the Plaintiffs who are the vendors of certain property in Yuen Long (the “Property”) seeking declarations that the Plaintiffs have proved and/or shown good title to the Property and have sufficiently answered the requisitions of the Defendant purchaser.

2.  There were four such requisitions in issue between the parties but, at the hearing of the Originating Summons I was informed that the Defendant now accepted that the original (or certified copies) of certain documents which formed the substance of the 4^th requisition had now been supplied by the Plaintiffs.  No decision is required on that question therefore.

3.  Moreover, it was agreed between the parties that, were the Court to find in favour of the Plaintiffs in regard to the 1^st and 2^nd requisitions, then that the Plaintiffs would comply with the 3^rd requisition by way of a statutory declaration.  The Court therefore was concerned only to make findings and, if appropriate declarations, in regard to the 1^st and 2^nd requisitions.

4.  The issues to be decided are largely common as between the two requisitions that require consideration and accordingly they will be considered together.

5.  The 1^st requisition is as follows:

“In Memorial No.YL118348 a Pang Chi Nam with Pang Ng Shi as trustee assigned the Property to a Kan Hang Tai by a Conveyance on sale in 1947. However no documents have been provided illustrating how Pang Chi Nam with Pang Ng Shi became trustee of the Property, and whether the said Pang Chi Nam with Pang Ng Shi have the right to convey the Property to Kan Hang Tai. The Plaintiffs’ Solicitors were requested to provide certified copies of documentary proof to clarify this issue.”

6.  The 2^nd requisition is:

“In Land Court Judgment dated 3^rd August 1955 (Memorial No.YL134086) it was stated that in the Ping Shan Land Register it was stated that Lau Shau On derived the Property by a Conveyance of Sale from Lee Ying Fat as the vendor. However in a Conveyance of Sale in 1951 (Memorial No. YL128394) the Property was assigned to Lau Shu On by a Li Man Ho as vendor. The Plaintiffs’ Solicitors were requested to clarify the said issue with documentary proof.”

7.  In summary therefore the 1^st requisition relates to a broken chain of title in the title documents, while the 2^nd requisition relates to an inconsistency between the Land Court Judgment and the Conveyance on Sale.  The former relates to the period between 1940 and 1947 and the latter the period about 1951-1955.

8.  The Plaintiffs accept that there is an obligation to show and deliver good title to the Defendant but submit that this obligation does not equate to a demonstration of a wholly pristine title.  The facts and circumstances surrounding the requisition must be such as to lead the court to conclude, beyond a reasonable doubt, that the purchaser will be able to take the property with no real risk of an incumbrance being asserted against him.  See MEPC Ltd. v Christian Edwards [1981] AC 205 at 220 and the judgment of Godfrey J. in Kan Wing Yau v Hong Kong Housing Society [1988] 2 HKLR 187.

The Statutory Provisions

9.  The Plaintiff’s primary reliance however is placed on the provisions of the Conveyancing and Property Ordinance (Cap.219) (“the Ordinance”); section 13 which of provides:

“13.(1) Unless the contrary intention is expressed, a purchaser of land shall be entitled to require from the vendor, as proof of title to that land, only production of the Government lease relating to the land sold and―

(a) Proof of title to that land―

(i) where the grant of the Government lease was less than 15 years before the contract of sale of that land, extending for the period since that grant; or

(ii) in any other case, extending not less than 15 years before the contract of sale of that land commencing with an assignment, a mortgage by assignment or a legal charge, each dealing with the whole estate and interest in that land;

(b) production of any document referred to in the assignment, mortgage or charge mentioned in paragraph (a) creating or disposing of an interest, power or obligation, which is not shown to have ceased or expired and subject to which any part of that land is disposed of; and

(c) production of any power of attorney under which any document produced is executed where that document was executed less than 15 years before the contract of sale of that land.

(2) Where this section requires the production of any document, it shall be sufficient to produce a copy―

(a) attested, before 1 November 1984, by 2 solicitors’ clerks; or

(b) certified by a public officer or a solicitor, to be a true copy.

(3) Subject to subsection (1), where any document produced as proof of title to any land contains a recital of any document dated or made before the date from which a vendor is required to prove title, the purchaser of that land shall assume, unless the contrary is proved, that―

(a) the recital is correct;

(b) the recital gives all the material contents of the document recited; and

(c) the document recited was duly executed and perfected.

(4)      A recital, statement, and description of any fact, matter or party contained in any document of title, mortgage, declaration or power of attorney relating to any land and dated or made not less than 15 years before the contract of sale of that land shall, for the purposes of any question as to proof of title concerning the parties to that contract and unless the contrary is proved, be sufficient evidence of the truth of that recital, statement and description.”

10.  This section addresses the question of proof of title by a vendor of a property such that proof of title may be achieved by the production of the intermediate root of title documents, that is, the Crown lease (in the present case) by which the property was first disposed of by the Government to the first owner, and title documents of the property for a period of not less than 15 years preceding the contract of sale of the property.

11.  The obligation on a vendor however is not just to ‘show’ a good title, it is necessary also to give a good title, and this requirement to give good title was considered by Saunders J. in Donpower Trading Ltd. v Apexcom Ltd. [2009] HKLRD 478 in which judgment the background to the enactment of s.13A of the Ordinance was set out.  That section provides as follows:

“Delivery of original deeds or documents of title

13A.(1) Unless the contrary intention is expressed, a purchaser of land shall be entitled to require the vendor to deliver to him, for the purpose of giving title to that land, the original of both of the following only―

(a) If there is a Government lease that relates exclusively to the land, the lease; and

(b) Any document that relates exclusively to the land and is required to be produced by the vendor as proof of title to that land under section 13(1)(a) and (c).

(2) Subsection (1) does not affect any rule of common law under which the vendor may discharge his obligation to give title to that land otherwise than by delivering the Government lease or document to the purchaser.

(3) If the vendor is not required to deliver to the purchaser a document in giving title to that land, the purchaser has no proprietary right or ownership in the document.

(4) The fact that―

(a) the vendor is not required to deliver to the purchaser a document in giving title to that land; and

(b) the purchaser has no proprietary right or ownership in the document, does not affect the right or interest of any other person in that land.”

12.  In Donpower Saunders J. held that the effect of s.13A was to reduce the burden on vendors such that the obligation in regard to delivering good title was met by the delivery of such title documents upon completion as the vendor was required to produce pursuant to s.13 of the Ordinance, that is, documents relating to the intermediate root of title.

13.  As Mr. Yan Kwok Wing, counsel for the Plaintiffs reminds me, that judgment was the subject of a successful appeal to the Court of Appeal, but on a different point.  In that appeal Cheung JA said as follows:

“34. It is said that s.13A has the effect of relieving the vendor from producing pre-intermediate root of title documents or proving such titles. Without deciding on the matter, I am prepared to accept that s.13A may have such an effect. But this effect, in my view, is already provided for by s.13(1).”

14.  This, while expressed in tentative terms insofar as s.13A is concerned is nevertheless clear; the statutory provisions have the effect of relieving a vendor of any obligation to produce pre-intermediate root of title documents.

15.  For the Defendant, Ms. Cecelia To relies on an earlier judgment of Cheung J. (as he then was) pre-dating the introduction of s.13A into the Ordinance in Dawson Properties Ltd. v Hong Kong Niroku Ltd. in support of a proposition that it is open to a purchaser to raise requisitions as to the pre-intermediate root of title in circumstances in which evidence shows that a relevant query arises.

16.  That may be so in an appropriately worded contract, but the Agreement for Sale and Purchase in the present case made provision for the manner in which title was to be shown and proved, namely in accordance with section 13 of the Ordinance.  As noted in that judgment neither common law nor s.13 of the Ordinance require a vendor to prove title throughout the whole period from the original lease.

17.  In the circumstances I agree with counsel for the Plaintiffs that the Plaintiffs were required only to produce title documents extending back 15 years prior to the date of the Agreement for Sale and Purchase.  That obligation was satisfied in the present case by the production of the Deed of Gift dated 15 October 1992.

The Requisitions

18.  That finding suffices to dispose of the matter in favour of the Plaintiffs.  However, for completeness I will record that I accept the Plaintiffs’ submissions to the effect that the requisitions have been answered satisfactorily.  The two questions that arise in this matter both require consideration whether the circumstances referred to in the requisitions are such as to give rise to a risk that is in any sense real that the purchaser’s title may, at some future date, be called into question.  In regard to the broken link in the chain of title, is there a real risk that a competing claim to ownership will arise?  In regard to the Land Court Judgment, do the discrepancies between that Judgment and the 1951 Conveyance of Sale evidence a similar risk?  Simply put, in my judgment the answer to each question is in the negative.  I do not believe there is any such risk as might be described as being more than hypothetical.  This is in part because of the long lapse of time, without any issue arising since the relevant facts first came into being.  The prospects of a rival title claim emerging from either set of circumstances, much less one with prospects of success seems remote. 

19.  Moreover I accept the submissions of Mr. Yan in regard to the 1^st requisition that there is an inference to be drawn from the memorials in 1947 and 1948 that title had been shown in the making of these transactions.  So far as the 2^nd requisition is concerned, I accept that that the effect of s.13(4) of the Conveyancing and Property Ordinance is to give rise to a presumption that the declaration by Lau Shu On that he was the beneficial owner in 1992.  Such a presumption could perhaps be rebutted by evidence, but has not been so rebutted in this case.

20.  In the circumstances therefore I concur with the Plaintiffs that they have established good title to the Property and have answered sufficiently the Defendant’s requisitions insofar as requisitions 1 and 2 are concerned.  There will be declarations to that effect in accordance with paragraphs 1 and 2 of the Originating Summons.

21.  No submissions were made to me in regard to paragraph 3 of the Originating Summons by which an Order requiring the Defendant to complete the transaction within 1 month from the date the Order was sought.  The parties have agreed that certain other steps are to be taken following this decision and imposing an Order for completion does not appear to be appropriate at this stage.  I allow the parties liberty to apply under that paragraph.

22.  The parties have agreed that there should be no order as to costs on this summons and I so Order.