BOFAI DEVELOPMENT LTD. v. SUMMIT LEADER LTD.

CACV 134/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 134 OF 1999

(ON APPEAL FROM HCA 4378/1998)

----------------------

J U D G M E N T

----------------------

Godfrey, J.A. :

Introduction

1. This is an appeal from an order of His Honour Judge Wesley Wong (sitting as a deputy judge of the Court of First Instance) made on 6 May 1999. By his order, the judge resolved a dispute between vendor and purchaser which came before him on an application by the purchaser, for summary judgment for the return of its deposits and other relief, pursuant to the provisions of Order 86 of the Rules of the High Court. The judge, being of the opinion that a requisition on title raised by the purchaser had not been satisfactorily answered by the vendor, ruled in favour of the purchaser and gave judgment in its favour accordingly. The vendor now appeals to this court.

The facts

2. The property the subject of the transaction between vendor and purchaser is "Office B" on the 6th floor of a building at 12 Harcourt Road, Hong Kong, originally known as Gammon House, but now known as Bank of America Tower.

3. The building is the subject of a Deed of Mutual Covenant ("the DMC") made on 5 June 1981. As appears from this, the 6th floor incorporates a service lift and lift hall, and another lift and lift hall serving the 6th floor offices. The lift hall enjoyed with the use of the service lift is within what is described in the DMC as "the Building Common Areas". The other lift hall is within what is described in the DMC as "Each Floor's Exclusive Areas".

4. The 6th floor has since been partitioned into "Office A" and "Office B". On 15 May 1997, the vendor took an assignment of "Office B". The property assigned to the vendor included half of the lift hall serving the 6th floor offices.

5. On 17 November 1997, the vendor agreed to sell to the purchaser and the purchaser agreed to purchase from the vendor "Office B" together with a car parking space.

6. On 9 December 1997, the purchaser's solicitors wrote to the vendor's solicitors raising a number of requisitions on title. These requisitions included a requisition No. 24 which reads as follows :-

"24. The Plan of the 6th Floor annexed to Assignment Memorial No. 1995965 are not the same as those Plans showing the 6th Floor annexed to previous title deeds and documents including Agreement Memorial No. 1981397 and the Plans annexed to the Deed of Mutual Covenant Memorial No. 2095606. Please confirm that the lift hall and toilets to be assigned to our client are not common areas of the Building and that your client has full right and ownership to assign the same."

7. On 31 December 1997, the vendor's solicitors replied to this requisition as follows :-

"24. We cannot see any difference between two plans. Please refer to the Sub-Deed of Mutual Covenant specified that the 1st owner have the exclusive right to the use occupation and enjoyment of All That the whole of the 6th Floor under an Assignment Memorial No. 6987956 the 1st owner assigned unto the 2nd owner All that the Office A (as shown coloured Yellow on the plan) and retained half of the lift hall and a Ex. lavatory in 6th Floor as shown and coloured Green on the plan. By a certified copy Architect's Certificate dated 23rd October 1996 and an Assignment Memorial No. 7163778 the said lift hall and a Ex. lavatory are properly assign to our client."

8. The purchaser's solicitors were not satisfied with this answer. On 6 January 1998, the purchaser's solicitors wrote to the vendor's solicitors as follows :-

"24. In the Agreement Memorial No. 1981397, there is a corridor on the Plan which is not part of the property agreed to be sold under the said Agreement. In the subsequent Assignment Memorial No. 1995965, the corridor has disappeared and becomes part of the Property assigned under the said Assignment. Please confirm whether there is a change of plans and the areas to be assigned and that the parties have all agreed to the same without any compensation.

In view that the actual colouring is not shown on the documents, it is also doubtful whether the area of the 6th Floor assigned under this Assignment Memorial No. 1995965 includes the toilets and the Lift Hall. In the Plan annexed to the Deed of Mutual Covenant Memorial No. 2095606, the Plans are not in the same layout or dimensions as that annexed to Assignment Memorial No. 1995965. In the said Deed of Mutual Covenant Memorial No. 2095606, 'The Building Common Areas' on Page 4 thereof is defined as including (for the 5th Floor to 36th Floors) the service lift and lift hall. On Page 7 of the said Deed of Mutual Covenant, the Offices and Toilets and Lift Halls on each floor are however defined as 'Each Floor's Exclusive Areas'. It is therefore unclear whether your client has the right to assign the Lift Hall. Please let us have the certified copies of the said Agreement Memorial No. 1981397, Assignment Memorial No. 1995965, Deed of Mutual Covenant Memorial No. 2095606 with Plans respectively annexed thereto duly coloured for our perusal and let us have the confirmation as requested in our letter to you of 9th December 1997."

9. On 19 January 1998, the vendor's solicitors replied as follows :-

"24. The Architect's Certificate together a plan attached properly certified that the partitioning does not constitute any structural alteration and delineated on the plan the Ex. Lav. half of the Lift Hall are assigned to the exclusive use by Office B. Please read the Deed of Mutual Covenant carefully, the Office and the Toilets and Lift Halls on each floor of the Commercial Tower is the exclusive areas are coloured pink on the Floor plans. In which, please note that there are clear colour code shown on the FLOOR 6 PLAN."

10. This still did not satisfy the purchaser's solicitors. In the end, the sale went off and the purchaser instituted proceedings in which it applied, as I have said, for summary judgment.

The judgment below

11. The judge, having considered the material to which I have referred, came to the conclusion that there was "a real risk of litigation" and that "the Requisition No. 24 has not been satisfactorily answered." He made the order now under appeal.

Was this a suitable case for summary judgment?

12. In the course of the proceedings below, an affirmation had been filed by Wong Chi Kau, a solicitor in the firm of solicitors acting for the purchaser. In this affirmation, referring to the requisition with which the court is concerned, Mr. Wong said this :-

"My Firm in a letter to JHT [the vendor's solicitors] dated 9th December 1997 raised, inter alia, the requisition as to whether the lift hall and toilets to be assigned are common areas of the building i.e. whether the Vendor has the right and ownership to assign the same ('the Requisition')."

There is, I think, no room for any doubt that that is indeed the substance of the requisition with which we are now concerned.

13. When the matter came before the judge below, the judge was presented with an argument on behalf of the purchaser making it clear that the only point to be taken by the purchaser on the summary proceedings under Order 86 was a point on this requisition, that is to say, whether it had or (as the purchaser contended) had not been satisfactorily answered. The purchaser expressly disclaimed reliance on any other objection to the vendor's title for the purposes of its Order 86 application.

14. In this court, Mr. Ronny Wong, S.C. for the purchaser, instructed at a late stage in connection with this appeal, sought to raise before us a point which went beyond the point the subject of the decision of the judge below. We refused him leave to do so. Accordingly, we are now concerned only with whether or not the judge was right to reach the conclusion which I have already mentioned.

Conclusion

15. My conclusion is that the judge was wrong to conclude (as he must have done) that the vendor plainly had no defence to the action. As it seems to me, the vendor has at least an arguable defence to the one point relied on by the purchaser at this stage; that is, that the answer given to the requisition No. 24 was a good answer. Accordingly the action must proceed to trial, a trial at which of course all issues will be open to the purchaser in the usual way. I do not think it desirable to express any opinion as to whether, at the end of the day, the vendor or the purchaser will succeed on the issue concerning requisition No. 24; i.e. whether the vendor's answer was or was not, in fact, a good answer. Indeed, it is, in my view, undesirable for the court to express any such opinion when denying an application for summary judgment under Order 86. It is sufficient to state that, for the reasons I have given, I am satisfied that we should allow the appeal; set aside the order of the judge; and, instead, give the vendor unconditional leave to defend the purchaser's action.

16. The vendor's costs of this appeal must be taxed (if not agreed) and paid by the purchaser to the vendor. The costs below will be costs in the cause.

Rogers, J.A. :

17. I agree.

18. I wish to say no more at this stage since, as Godfrey, J.A. has pointed out, these are summary judgment proceedings and the less said at this stage the better.

Keith J.A.:

19. I agree that this appeal should be allowed. It is important to remember, as my Lords have pointed out, that the order appealed from was made on an application for summary judgment under Ord. 86 rather than on a vendor and purchaser summons. Accordingly, the question for the judge was simply whether there was an issue to be tried as to whether the requisition to which the summons related was sufficiently answered. In my view, there is such an issue to be tried. The relevant requisition related only to whether the lift hall and the toilets on the 6th floor of the building were common areas of the building, or whether the Defendant vendor was entitled to assign them to the Plaintiff purchaser. The answer to the requisition referred the purchaser's solicitors to the precise terms of the Deed of Mutual Covenant. In my view, it is arguable that that was a sufficient answer to the concerns expressed by the purchaser's solicitors because the terms of the Deed of Mutual Covenant were arguably such as to make it clear that the Defendant was entitled to assign the lift hall and the toilets to the Plaintiff. In those circumstances, I agree that the order to be made to give effect to the allowing of the appeal is that the Defendant should be given unconditional leave to defend the action.