CHUNG KWOK YIU RINGO v. LEUNG CHI SHING and Another

1995, No.MP2489

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This vendor and purchaser summons was issued on 6 September 1995 by Chung Kwok Yiu Ringo, the Purchaser under an agreement for the sale and purchase of Flat No.3 on the 10th Floor of Block A of Sui Wo Court, Sha Tin, New Territories dated 11 July 1995. Completion was scheduled for 31 August 1995, time being of the essence. It is the Purchaser's case that he has properly raised certain requisitions, that the Defendants who are the Vendors have not satisfactorily or sufficiently answered his requisitions and therefore the Defendants have failed to show a good title in respect of the property. Further, the Purchaser submitted that by imposing a new time for completion, the Defendants had repudiated the agreement. The Purchaser claims that the Vendors have wrongfully forfeited his deposit which was 10% of the purchase price of $1.65 million.

2. On 15 August 1995, the Purchaser raised requisitions regarding the removal of certain internal walls within the property and the erection of a new partition wall. It asserted that these were "structural alterations" which unless previously approved by the Building Authority were unauthorised and illegal alterations. On this basis, the Vendors were asked to provide written approval from the Building Authority to the alterations. On 16 August, the Vendors' solicitors replied that no structural alteration had been made by their clients and that therefore no written approval from the Building Authority was necessary. Correspondence in this vein continued between the parties for several days, and on 19 August, the Purchaser sent to the Vendors a copy of the sketch plan showing the "illegal [structures]". On 21 August, the Purchaser raised additional matters. In that letter, it was stated that :

"The structure in the toilet has been altered and some of the windows had been blocked."

In their letter of 23 August, the Purchaser's solicitors set out the alterations that were the subject of the requisitions, namely

(a) the removal of the original walls for two bedrooms;

(b) one of the walls in (a) was under and/or connected to a structural beam before removal;

(c) the erection of a new wall making the first bedroom into a bigger bedroom;

(d) one of the windows in the bedroom in (c) was "blocked by structure"; and

(e) the replacement of the bath by a shower with possible changes in drainage system and manhole.

The Purchaser asked the Vendors to provide prior written approval by the Building Authority to the "structural alterations and/or additional building works".

3. On the same day, 23 August, the Vendors' solicitors issued another denial that there had been structural alterations to the property. In particular, they denied the allegations made in items (b), (d) and (e) above. They went on to say :

"The window was not blocked by structure. We are instructed that our clients only placed the wardrobe in front of the window. The ceiling of the property was covered by false ceiling. No such beam is found by our client. The bath tub was replaced by a shower tray. There is no change in the drainage system and manhole."

On 29 August, the Vendors forwarded an Architect's Certificate to the Purchaser. This provided as follows :

" The demolition of the original partition walls to bedrooms and kitchen, as indicated in blue in the attached plan, does not involve any structural alteration and would not affect the structural stability of the building.

The erection of new partition wall to bedroom as indicated in red in the attached plan, also does not involve any structural alteration and will not affect the structural stability of the building.

Such reposition, as mentioned above, are exempted works under the present Building Ordinances and Regulations and therefore, do not require the submission of plans for the approval of the Building Authority under the present Building Ordinances and Regulations."

4. Prior to the issuance of the certificate, the Vendors' solicitors had written to the architect in question informing him that additional allegations had been made as to work done to the property, that they had been instructed by their clients that the bath tub had been replaced with the shower tray, that no structural change to the drainage system or manhole had been made. It further stated that their clients had not blocked the window with any structure, that only the wardrobe had been placed in front of the window; that the beam had not been removed but was concealed by a false ceiling. The letter went on to say that :

"Unless your opinion will be affected by the matters aforesaid, we have no comment on your draft architect's certificate."

This letter was not sent to the Purchasers.

5. The architect issued his Certificate the following day and it is to be inferred from the issuance of that Certificate, in the light of the letter of 24 August, that the additional matters raised did not affect the architect's opinion. On 30 August, the Purchaser's solicitors wrote to the Vendors' solicitors to the effect that the Purchaser should have reasonable time to consider the title and his position and they proposed that the purchase should be completed within 7 working days from the date when all requisitions should have been fully complied with. The Vendors' solicitors considered that the requisitions raised had been satisfactorily answered and in those circumstances, in response to the request regarding completion, they granted an extension of 7 working days from 29 August solely for the Purchaser to take expert advice on the Architect's Certificate and asserted that the Purchaser did not have the right to raise any further requisitions in respect of the Vendors' title.

6. The Purchaser insisted on an amended certificate to confirm that the property and its building plan had been inspected and examined by the architect. He also required the architect's opinion on the other structural alterations relating to the bathroom and the structure in the window.

7. On 7 September, as the purchase had not been completed, the Vendors purported to forfeit the Purchaser's deposit and to rescind the Agreement.

The statutory scheme

8. In brief, building works may not be carried out without prior approval from the Building Authority unless those works fall within the exemptions set out in s.41 of the Buildings Ordinance Cap.123.

9. The exemptions that are relevant in the present case are those contained in sub-sections (3) and (3A) of s.41. They provide as follows :

"(3) Building works other than drainage works, ground investigation in the scheduled areas or site formation works not involving the structure of any building may be carried out in any building without application to or approval from the Building Authority :

Provided that nothing in this section shall permit any building works to be carried out in contravention of any regulation.

(3A) Drainage works may be carried out in or for any existing building without application to or approval from the Building Authority if those works do not involve -

(a) the structure of any building ...

Provided that nothing in this sub-section shall permit any drainage works to be carried out in contravention of any regulation."

Section 2(1) of Cap.123 contains definitions for "building works" and "drainage works" :

"building works" means any kind of building construction, repairs, demolition, alteration, addition in every kind of building operation and includes drainage works.

"drainage works" means any work connected with the construction, repair, alteration, disconnection, trapping and ventilation of drains or sewers.

Obligation to show good title

10. The obligation is on the Vendor to show and prove good title, namely, one which can at all times, and in all circumstances, be forced upon an unwilling purchaser in an action for specific performance. The court must be satisfied beyond reasonable doubt that the purchase will not be at risk of a successful assertion against him of an incumbrance. It was only if the blot on his title were purely theoretical and not a practical blot that it could be ignored. See Kan Wing Yau v. Hong Kong Housing Society [1988] 2 HKLR 187.

11. As to the vendor's contractual duty to answer requisitions properly, the Court of Appeal has held that the duty "is not an onerous one. All that is required of the vendor is candour and commonsense" : see per Litton, J.A. in Active Keen Industries Ltd v. Fok Chi-keong [1994] 1 HKLR 396 at 413. In that case, the Court of Appeal approved the approach adopted by the learned judge in the Court below in considering the vendor's obligation where an objection has no substance. To the question - is it enough for the vendor to say : "there is no substance in the purchaser's objection"? the judge below had answered : "If there is nothing the vendor can usefully add, I would hold that it is enough." So, if the matter is self-evident, the purchaser's solicitors cannot insist upon a fuller reply. See Active Keen at pp.406-407.

The requisitions

12. I now turn to consider the requisitions in the light of the statutory provisions and the legal principles set out above.

(a) Partition walls

13. The effect of the building works was to replace the original two bedrooms by a larger single bedroom and to enlarge the living room. It is common ground that the original partition walls to the bedrooms and the kitchen had been demolished and that a new partition wall had been erected to form the enlarged bedroom. The question is whether such alterations related to "the structure" of the building.

14. Whilst I agree that the repeated denials of the Vendors that the alterations were structural did not constitute an adequate response to the requisitions, the Architect's Certificate did provide evidence that such alterations were not structural. Therefore, in relation to the partition walls, the requisitions were satisfactorily answered by the Architect's Certificate which was provided to the Purchaser on 29 August. Cf. Dei Chuen Ho Industrial Ltd. v. Leung Yin Por [1993] 2 HKC 495 at 503G-H where no such evidence was adduced.

15. Although the Purchaser had contended in correspondence that the Architect's Certificate was insufficient because no site visit had been made and there was no express confirmation that the architect had studied the building plan, this was not seriously pursued at the hearing. It is clear from the Certificate itself that it was given by reference to the plan of the property obtained from the Housing Department of Hong Kong and the sketch prepared by the Purchaser depicting the new layout. Were it material, I would hold that the architect could properly have come to an informed opinion based on the material and information contained in the floor plan and the present layout of the flat.

(b) The window

16. The requisitions that had been raised with regard to the window had been variously framed as "structure at the window", "blocked by structure" and "some of the windows had been blocked", none of which was particularly satisfactory. It is to be noted that no building works had been done to the window or windows in question. Here, it was not a question of the window itself being bricked up which would undoubtedly have constituted building works.

17. The alterations that had been carried out in the flat effectively converted a two-bedroom flat into a single-bedroom flat. It is apparent from the building plan and the Purchaser's sketch that the original first bedroom had been enlarged and a fitted wardrobe was installed in what had formerly formed part of the second bedroom. The wardrobe ran along the length of the wall abutting, at one end, a window. This window was formerly a window of the second bedroom. In this context, I should mention that although at the hearing, I was told that there were windows on two sides of the bedroom, this is clearly not the case as is readily apparent from a careful perusal of the plan and the sketch. Rather, the position was as first described.

18. The building of a fitted wardrobe itself is a matter of internal decoration and would not normally constitute "building works" that affected the structure of the building. Therefore, neither the erection nor the dismantling of the wardrobe would have required prior permission from the Building Authority. That being the case, the window in question could have become "unblocked" without anyone's permission. That is really a matter of commonsense.

19. There is exhibited to the 2nd affirmation of the Purchaser filed shortly before the hearing, an opinion from an architect dated 23 September 1995. This, of course, was well after the date fixed for completion under the Agreement. There it was suggested that the blockage of the window might have caused a contravention of the Building (Planning) Regulations in that para.30 of these Regulations which deals with natural lighting and ventilation required a certain minimum aggregate superficial area of glass in the windows as well as a minimum extent to which the windows could be opened. Of course, the requisitions relating to the window had never been framed in these terms. As noted above, they were not particularly clearly framed.

20. In their letter of 23 August to the Vendors' solicitors, after reiterating the alterations that were the subject of the requisitions, the Purchaser's solicitors added a general paragraph in these terms :

"Unauthorised structure and/or alteration may result in breach of ... regulations of Building Authority ..."

It was argued that that paragraph sufficiently brought to the notice of the Vendors that, inter alia, para.30 of the Planning Regulation had to be complied with. Read in its proper context, I do not think that that paragraph was a sufficient reference to the Planning Regulation in question. For that general paragraph to apply, there had to be an "unauthorised structure and/or alteration." The wardrobe itself could not have been an "unauthorised structure" for, as noted above, the building of a wardrobe did not require Building Authority approved. "Alteration[s]" presupposed "building works". No such works were carried out in relation to the window in question.

21. Regulation 30 was obviously intended to ensure that each room that was fit for habitation should have a minimum area of natural light and ventilation. It is not at all evident that the window blockage as now described could possibly have contravened Regulation 30 had a requisition been framed in those terms (which it was not). The reason is this : when one looks at the plan and the outside of the building as depicted in the photographs exhibited to the Vendors' 1st affirmation, the alterations effectively eliminated the second bedroom, most of which became the enlarged living room. When one looks at the configuration of the first bedroom which has remained a bedroom, the alteration did not cause it to lose any of the original window area. It is plain from the sketch prepared by the Purchaser, the building plan, and the photographs, that the window adjacent to the fitted wardrobe was part of the window area of the second bedroom which, as a result of the alterations, no longer existed. In fact, much of the second bedroom has been absorbed into the living area. In my view, the requisition based on the "structure at the window" was misconceived.

(c) Replacement of the bath by a shower

22. The initial requisition contained in the letter of 21 August was that the "structure in the toilet has been altered". This was clarified in the letter of 23 August where the concern was possible changes in the drainage system and manhole caused by the substitution of the shower for the bath. On the same day, the Vendors' solicitors replied to the effect that "The bath tub was replaced by a shower tray. There is no change in the drainage system and manhole."

23. The question is whether this sufficiently answered the requisition. It is the Purchaser's contention that this was inadequate and that the Vendors had to adduce evidence that indeed there had been no change in the drainage system. The adequacy of a response to a requisition obviously has to be considered in light of the actual circumstances. Here, one is not concerned with the repositioning of the existing bathroom to another part of the flat nor indeed of the various amenities within the bathroom itself. It is simply a question of taking out the bath tub and installing a shower in its place.

24. Having seen the photograph of the bathroom and the layout of the original bathroom amenities as depicted both on the building plan and the Purchaser's sketch, I am satisfied that this was the case and that there was no rearrangement of the amenities. In those circumstances, where the Vendors replied to the effect that no drainage works had been carried out, was it reasonable to expect them to go further to provide evidence from the persons who carried out the work to that effect, or as the Purchaser appears to suggest, that the Architect's Certificate should so state? The commonsense answer to this question is that the Vendors had sufficiently answered the requisition. Had the shower been moved to another part of the bathroom instead of directly replacing what had been the bath, further evidence might have been necessary. But that was not the case here. It appears to me from the way the requisition was put and from the initial submissions made that the Purchaser had misunderstood the reference to "manhole" in the legislation. The replacement work carried out could not conceivably have affected any "manhole".

The 7 working day extension

25. The only question that remains is whether, as the Architect's Certificate was not provided to the Purchaser until 29 August, the Vendors acted reasonably in extending the date fixed for completion to 6 September, giving the Purchaser 7 full working days after receipt of the Architect's Certificate to consider the matter.

26. The source of the 7 working days extension appears to have been the Purchaser's own proposal made in his letter of 30 August 1995. In that letter, the Purchaser had suggested that he should have reasonable time to consider the title and his own position and that the purchase should be completed within 7 working days from the date when all requisitions should have been fully complied with. The only difference between the parties is whether by the time the Architect's Certificate was provided, all requisitions had been adequately answered. If so, then the extended completion date was obviously reasonable.

27. For the reasons set out above, the only live requisitions as at 29 August related to the partition walls. Those requisitions were sufficiently answered by the Architect's Certificate. In those circumstances, I cannot see that by extending the completion date by 7 working days from 29 August, the Vendors were acting unreasonably or had by conduct repudiated the Agreement.

28. Accordingly, the Summons is dismissed with costs nisi to the Defendants.

(Doreen Le Pichon)

Judge of the High Court