LAI CHUNG YUE AND ANOTHER v. CHAU SHING AND ANOTHER

HEADNOTE

The vendors under an agreement of 17th June 1987 agreed to provide proof of title of at least 25 years before the date of the agreement. They offered as the root of title a Conveyance of 15th May 1957. But they could not produce the conveyance, nor the power of attorney under which it was executed (nor any secondary evidence of the contents of the power of attorney). They proved over 20 years possession in accordance with the title.

HELD :

(Observation on the difference between documents of title and the memorials of such documents; and on the Court's reluctance to make general declarations as to title.)

1987, No. M.P. 2206

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. This is a vendor and purchaser summons. The plaintiffs are the vendors and the defendants are the purchasers of the Remaining Portion of Subsection 1 of Section D of Lot No. 1363 in Demarcation District No. 121 registered in the District Lands Office, Yuen Long ("the property").

2. The facts are as follows.

3. The property was expressed to be conveyed by a Conveyance dated 15th May 1957 ("the 1957 Conveyance") made between (1) Li Yan Wing (as vendor); and (2) Hsien Ko Lai Ngo (as purchaser). The 1957 Conveyance was not put in evidence, but a copy of a memorial of the 1957 Conveyance was put in evidence. The memorial shows that the 1957 Conveyance was executed not by Li Yan Wing personally, but by his attorney. The power of attorney authorising the attorney to execute the 1957 Conveyance was not put in evidence; there was evidence that it could not be found or traced. By a Conveyance dated 2nd April 1981 ("the 1981 Conveyance"), the purchaser under the 1957 Conveyance, Hsien Ko Lai Ngo, was expressed to convey the property to the plaintiffs. A memorial of the 1981 Conveyance was duly registered and the 1981 Conveyance was itself put in evidence.

4. By an agreement dated 17th June 1987 the plaintiffs agreed to sell the property to the defendants. The agreement provided, by Clause 15(a), that the plaintiffs, as proof of title to the property, would produce (i) the Crown lease or the Agreement for the Crown lease or any instrument whereby the terms of the Crown Lease may have been extended or varied (no such Lease, Agreement or instrument was put in evidence); (ii) proof of title to the property of at least 25 years before the date of the agreement commencing with (1) an assignment on sale; or (2) a mortgage by way of assignment; or (3) a legal charge dealing with the whole estate and interest in the property.

5. The plaintiffs offered, as the root of title, the 1957 Conveyance. This was dated over 30 years before the date of the agreement. But the 1957 Conveyance itself was not produced at all. Further, even if it had been produced, the defendants would have been entitled to production of the power of attorney under which the 1957 Conveyance was executed : see Section 13(1) (c) of the Conveyancing and Property Ordinance, Cap.219. And this was not produced either.

6. For these reasons, I cannot find that the plaintiffs have shown a good title to the property, as I. was asked to do, although I do consider it to be marketable.

7. It was argued on behalf of the plaintiffs that the production of the 1957 Conveyance was not required, because it was the practice in the New Territories to have no such conveyance but simply a memorial of such a conveyance; and that it was sufficient to produce the memorial for the purpose of proving title to the land. If it is the practice of those concerned with conveyancing of land situated in the New Territories to confuse a memorial of an instrument with the instrument itself, it is high time that that practice was corrected. It is plainly wrong. A memorial is no more than a record of a "deed, will or other instrument, or any judgment, order or lis pendens in respect of or affecting land" : see Section 11(1) of the New Territories Ordinance. It is evidence of the registration of a conveyance, not of its contents. This is not the first case in which I have been asked to accept that, so long as a copy of the memorial of a conveyance is produced, it is unnecessary to produce the conveyance. How this misconception has arisen, I do not know. But misconception it is. The profession must realise that the provisions contained in the New Territories Ordinance for the registration of memorials is not equivalent to a system of registration of title of land. In the New Territories, as elsewhere, it is necessary, in deducting title, to produce the root of title with which the vendor claims his title commences unless special stipulation is made to the contrary. The fact that, in the present case itself, there is produced both the 1981 Conveyance and a copy of the memorial of that Conveyance would, I should have thought, have been proof enough that a conveyance and the memorial of it are two separate and distinct things.

8. The failure to produce, not only the original of the power of attorney under which the 1957 Conveyance was executed, but any secondary evidence at all of its contents, is another defect in the title. There was evidence that the plaintiffs had done all they could to find the power of attorney, and to produce secondary evidence of its contents, but that they had been unsuccessful. However, from the defendants' point of view, this is neither here nor there. Either the plaintiffs do deduce title in accordance with the contract, including a compliance with the provisions of Section 13(1)(c) of the Conveyancing and Property Ordinance, or they do not. If they do not, it is of no assistance to them to show that they have tried as hard as they could to do so.

9. Faced with these difficulties, I was asked to declare that, at any rate, the title was a marketable title. It was emphasised that the 1957 Conveyance was made over 30 years ago, and that the evidence was that possession of the land had been enjoyed in accordance with the title ever since then. The plaintiffs, it was said, had a good possession title to the land. But, as is shown by In re Alkinson and Horsell's Contract. [1912] 1 Ch. 1, although a defective title can be cured by possession, the vendor must prove a good documentary title up to the defect. Only if he can do so will his subsequent possession help him.

10. It does not appear to be sufficiently appreciated in Hong Kong that a possessory title does not suffice in place of instruments known to be lost; in such a case secondary evidence of the lost documents is required : see In re Halifax Commercial Banking Co. Ltd. and Wood (1898) 79 LT 536.

11. Despite all this, the truth of the matter is that the title here is a good holding title. "There are bad titles and bad titles, bad titles which are good holding titles, although they may be open to objection which are not serious, are bad titles in a conveyance's point of view, but good in a businessman's point of view" ; per Lindley LJ in In re Scott and Alvarez's Contract [1895] 2 Ch. 603, at p. 613. A title with a technical defect, under which there has been undisturbed possession, becomes a good holding title and accordingly a marketable title if the possession is likely to continue to be undisturbed. In Hong Kong, 20 years possession normally leads to this likelihood.

12. In these circumstances, I am prepared to declare, as I have been asked to do, that this is a marketable title. But I cannot declare that the plaintiff has shown a good title.

13. Solicitors are always able, if they wish, to prepare contracts for their clients which disclose such difficulties as have arisen in this case; and which provide that the purchaser shall have no right to raise requisitions or objections in relation thereto. If, instead, they allow their clients to enter into contracts obliging them to show a good title to the property they cannot expect to have the defect in their title cured by an order of the Court made under Section 12 of the Conveyancing and Property Ordinance. As I have had occasion to remark before, that section confers on the Court a power to declare whether or not a good title has been shown; it does not confer on the Court a power to declare a title to be a good one although that has not been shown. The powers of the Court under Section 12 are declaratory not curative. And the power of the Court to make general declarations as to title, as distinct from dealing only with particular questions, should be sparingly exercised. As Williams LJ pointed out in In re Halifax Commercial Banking Co. Ltd. and Wood (see above) at p. 540 :

"When you come to deal with a [vendor and purchaser] summons ..... although the vendors framed their summons in the most general terms -- that it might be declared that they had shown a good title -- it does not seam to me ..... that that summons is to be heard without any definition of the real question that the parties invite the Court to decide. The matter is not to be brought in that wholesale matter before the Judge ..... the parties must define the question which is really to be raised ..... ".

14. In this particular case I will declare that the plaintiffs have shown a marketable title to the property; but no more. And I give notice that in future I will not be prepared to make declarations in such general terms save in exceptional cases.